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- Title
Housing Taxation and Economic Growth: Analysis of a Balanced-Growth Model with Residential Capital.
- Authors
Vinson, Philip
- Abstract
Using a neoclassical model with endogenous growth, this study examines the effects of increasing housing taxation and eliminating the mortgage interest tax deduction on economic growth and household welfare in the United States. The optimal tax policy reduces taxation of income in favor of increased taxation of housing and consumption. This policy increases the growth rate by 0.49 percentage points. In addition, simply shifting the tax burden by reducing the tax rates on productive forms of capital toward housing can increase the growth rate up to 0.18 percentage points. This study also find that eliminating the income tax deduction on mortgage interest and lowering income taxes would increase growth by about 0.016 percentage points. Each of these proposed policies improves household welfare.
- Subjects
UNITED States; ECONOMIC research; ENDOGENOUS growth (Economics); CONSUMPTION tax; INCOME tax deductions; TAXATION; TAX incidence; INCOME tax
- Publication
B.E. Journal of Macroeconomics, 2023, Vol 23, Issue 1, p181
- ISSN
2194-6116
- Publication type
Article
- DOI
10.1515/bejm-2021-0159