Are There Tax Arbitrage Opportunities in Private Rental Housing Markets?

Tax arbitrage opportunities in rental housing markets arise when high bracket taxpayers exploit the tax shelter and conversion features of the tax treatment of rental housing and as a consequence offer low bracket taxpayers rental housing at a cost lower than if they purchased the same quantity of housing for owner occupation. A microdata set has been employed to estimate the size of these tax arbitrage opportunities with respect to 1907 properties owned by Australian landlords. The measure of tax arbitrage opportunities is the breakeven tax rate at which the maximum rental rate a potential occupant is prepared to pay before turning to purchased housing is equal to the landlord's reservation rental rate. Potential occupants with marginal tax rates below the breakeven tax rate find that renting has a relative cost advantage over home purchase. When agency costs (the costs incurred in managing landlord-tenant relationships) are included in the tax arbitrage model, our estimates of the breakeven tax rate indicate that home purchase has a relative cost advantage over renting for most potential occupants. Renting is only financially attractive to low tax bracket individuals. This finding is consistent with Australian tenure patterns. However, there are more puzzling results. A majority of landlords belong to tax brackets below the top bracket, landlords in the lowest tax brackets typically make below normal profits, and reservation rental rates at the bottom of the rental housing market are relatively high. Down payment requirements, lock-in effects, and rent clientele groups are put forward as possible explanations for these findings.     

Taxation and Housing Tenure Choice: The Case for Moderate-Income Homeownership

This study explores the financial value of homeownership for households in the 15% Federal tax bracket. Earlier studies concluded homeownership was only for households with high marginal tax rates, but they neglected how vacancy and turnover rates factor into rental prices. Principal innovations here include deriving long-run equilibrium rent-to-value ratios for the rental market and contrasting investor holding periods with lengths of household tenures. Tax regime simulations are performed for homeowner deductions and investor capital gains tax rates.     

A model of rental and owner-occupied housing

A complete model of owner-occupied and rental housing is developed. The model allows for the endogenous determination of rents, the user cost of owner-occupied housing and housing tenure choice by individuals. In the short run, structure prices are endogenous, while in the long run the size of the housing stock adjusts to equate structure prices to exogenous construction costs. Comparative static results emphasize the importance of marginal tax rates and distinguishing between the short and long run for a complete understanding of the impacts of inflation on housing markets.     

Property Tax and Housing Returns

This paper evaluates the effects of property tax on housing. While land tax and capital gains tax are widely used for curbing hoarding of land and speculation, its effectiveness is inconclusive. The imposition of a capital gains tax will impair the liquidity of property transaction, lower the rate of return on property investment, and reduce revenue from land sales which represents an important tax resource for the communities. This paper shows that a capital gains tax is capitalized into housing prices. Individuals tend to postpone the purchase of houses because of transaction taxes. Using an impulse response function, we show that a transaction tax has a dynamic negative impact on housing returns. While this paper focuses on Hong kong, for the purpose of comparison Singapore and Taiwan are also discussed.     

Location incentives in the low-income housing tax credit: Are qualified census tracts necessary?

The low-income housing tax credit (LIHTC) is the largest project-based housing subsidy in the United States. Within the program, private developers receive a subsidy in exchange for constructing apartment units that rent for a predetermined affordable rate. Because the subsidy requires apartment buildings to charge a lower rental rate, the opportunity cost of developing subsidized housing in a location is the market rent that a developer could have charged if he had not received the subsidy. This study characterizes how profit incentives motivate location decisions within the LIHTC program by showing that opportunity cost causes more LIHTC development in locations with low market rent. This result implies that additional financial incentives, like the qualified census tract, may not be necessary to promote construction of subsidized housing in low-rent areas.     

Modeling returns to owner-occupied single-family residences

This paper expands previous models of the returns to owner-occupied single-family residences by modelling returns to a specific property of an individual homeowner instead of determining an average market return based on appraised values. Included in the model are transaction costs, degree of leverage, level of price appreciation, the implied rental cost in ownership, tax bracket, and duration of home ownership. Simulation results suggests that the level and timing of transaction costs are important to homeowners and rates of return to owner-occupied single-family residences increase to a point in time and thereafter decline.     

A note resolving the debate on “The weighted average cost of capital is not quite right”

Miller (2009a) derives a weighted average cost of capital for the special case where the cash flows to equity and the cash flows to debt are annuities. The paper attracts debate. We show that the weighted average cost of capital is redundant in a world where interest paid is not tax deductible. The required rate of return on unlevered equity will consistently and reliably estimate the net present value of any project no matter the idiosyncratic beliefs of the analyst as to the year-by-year leverage of the project, or of the firm. We recommend that the weighted average cost of capital method is discarded.     

Maintenance contracts for leased goods: their role in creating brand loyalty

Using a two‐period switching cost model, this paper compares rental profit with sales profit in a framework in which duopolists produce horizontally differentiated durable goods. Rental firms use maintenance contracts that stipulate that repeat customers pay a lower fine per unit of damage than do those customers who switch to a rival firm. In the sales regime, firms give loyal customers a discount on their second period prices. If switching costs are zero, sales profit equals rental profit. For positive and identical switching costs, either regime can dominate. As the exogenous rate of depreciation falls, rental profit exceeds sales profit. Copyright © 2000 John Wiley & Sons, Ltd.     

Irreversible investment and capacity choice with Bayesian learning

This paper incorporates information incompleteness into the standard capacity choice model. The firm dynamically updates its belief about the expected growth rate based on the realization of demand shocks. First, the firm’s expansion decision becomes more conservative in the dynamic updating case. Moreover, a myopic firm always overestimates the marginal value of capital but underestimates firm value. When we decompose the firm value into the value of assets in place and growth opportunities, dynamic learning significantly increases the value of growth opportunities rather than that of assets in place. Finally, the implications for the user cost of capital is also examined.     

Accounting for owner-occupied dwelling services: Aggregates and distributions

Research linking macro and micro statistics of dwelling services is in its infancy in the U.S. including work by the Bureau of Economic Analysis, Bureau of Labor Statistics, and the Census Bureau. Comparisons of aggregated estimates generated from micro-level data to estimates at the macro-level can inform both levels on the accuracy and precision of methods and data sources. In this study, the treatments of housing in the macro statistics of the National Accounts and in the micro statistics of household expenditure and income surveys are examined. Three approaches to value dwelling services using household survey data are compared: capitalization rate, hedonic, and rental equivalence. Estimates are produced using data from the U.S. Consumer Expenditure Survey and American Housing Survey. Estimated aggregates of implicit net rental income from owner-occupied housing are compared to the aggregate value in the National Accounts. Possible sources of differences in the macro- and micro-based aggregates are discussed. The effects of adding net implicit rental income on income distributions are examined, particularly on inferences about the relative well-being by the age of householder. Overall, only marginal reductions in income equality result when net rental incomes are added to before tax money income; this only occurs when reported rental equivalence and return to home equity are used as methods of rent estimation.     

Using ex-day returns to separate the tax and information effects of dividend changes

In this paper, the information content of dividends is tested by examining the abnormal return on the announcement date. To address the potentially confounding effects of the tax penalty, the abnormal exdividend day return is used to separate stocks for which dividends impose a tax penalty on marginal investors from stocks for which dividends provide a tax benefit to marginal investors. This separation uncovers results that support the information content hypothesis; dividend increases result in positive abnormal announcement day returns even for stocks whose marginal investors are averse to dividends.     

财务柔性对资本结构及其动态调整的影响分析——基于我国A股上市公司经验数据

以我国2007—2016年沪深A股上市公司为样本进行实证检验,研究发现,我国上市公司存在获取和保持财务柔性的动机,且通常以持有现金的方式获取财务柔性;财务柔性是企业资本结构决策考虑的关键因素之一,财务柔性有利于优化资本结构调整速度,缓解资本结构调整的偏离度。     

Labor supply responses to the 1990s Japanese tax reforms

The consumption-leisure choice model implies that an exogenous change in tax rates will induce a change in labor supply. This implication is expected to be important to labor supplied by secondary earners under a progressive tax system when spousal income alters effective marginal tax rates. This paper examines labor supply responses to the income tax changes associated with Japanese tax reforms during the 1990s. The results indicate that the hours-of-work elasticity with respect to the net-of-tax rate is 0.8 for married women.     

指数关联债券——城市公租房建设融资的途径探索

《十二五规划纲要》中提出的五年内建设3600万套保障性住房至少需要投资4万亿元,其中绝大部分需要地方政府融资.针对其中公租房存在的融资瓶颈,本文分析了发行市政债券的必要性,提出发行一种创新型产品——指数关联债券(Index Linked Bond),以促进地方政府的信用建设,改善融资环境.另外,本文量化分析了公租房的造...     

Endogenous fertility, multiple growth paths, and economic convergence

"This paper extends the Cass-Koopmans optimal growth model to allow for endogenous fertility choice. It is shown that if agents choose their fertility rate, then the net rate of return on capital (marginal product of capital minus the population growth rate) may not be monotonically decreasing in capital. In this case, multiple steady states and growth paths may emerge, which can explain the persistent differentials in income between poor and rich countries, as well as the existence of development miracles and disasters. The paper provides also empirical evidence which supports the existence of multiple convergence groups and is consistent with the theoretical model."     

个人投资创办实体的纳税筹划

由于个人投资企业多规模小、资金薄弱、财务相对不健全,税负优惠政策少,税负对于企业效益十分重要。本文从构建企业的一些基本要素诸如:企业注册、纳税申请、经营场所、人员招聘等方面着手,提供了一些纳税的筹划方向。     

Why Lever into a Zero-Profit Industry: Tying, Foreclosure, and Exclusion

This paper considers the incentives of a firm with power in a market for one good to tie in the sale of a complementary good even though the complementary good is produced in a zero profit market. If the zero-profit price of the tied good is greater than the marginal cost (which occurs for example when the technology is characterized by a fixed cost and a constant marginal cost), a firm will fie in order to increase the sales of the complementary good, which at the margin is profitable. We show that such tying will lower the effective prices paid by customers and increase welfare. This incentive exists if the firm with market power is a monopolist or one of several competing oligopolists.     

Implications of productive government spending for fiscal policy

The standard assumption in macroeconomics that government spending is unproductive can have substantive implications for tax and spending policy. Productive government spending introduces a positive feedback between the tax rate, the productive capacity of the economy, and tax revenue. We allow marginal tax revenue to be optimally allocated between productive subsidies to human capital and utility-enhancing government consumption and calculate Laffer Curves for the US. Productive government spending yields higher revenue-maximizing tax rates, steeper slopes at low tax rates and higher peaks. The differences are particularly pronounced for the labor-tax Laffer curve. The use of tax revenue is an important determinant of the actual revenue that a tax rate increase generates.     

税收累进性测度的改进：方法、比较和应用

提出判断税收累进性的边际效应方法：当总收入基尼系数的税收边际效应大于0时,该税收具有累进性特征;并将税收边际效应作为测度指数。边际效应指数与K指数具有完全相同的符号,不同税种具有可加性,它比K指数更为稳健,且赋予了税收累进性新的经济含义：税收对总收入基尼系数贡献率大于平均税率。同时还着重讨论几种测度税收累进性指数的关系,对各种测度指数进行了实证,发现S指数存在一定程度的缺陷。     

增值税“扩围”改革对行业税负变动的预期影响

增值税“扩围”改革将影响到各行业的流转税负担.利用投入产出表数据,测算增值税“扩围”改革对目前属于增值税征收范围的行业(即“增值税行业”)和目前属于营业税征收范围行业(即“营业税行业”)流转税税负变动的影响,结果显示:增值税行业的总体税负将有小幅下降,服务中间投入比率是影响各增值税行业减税效应大小的关键因素;各营业税行业的税负变化情况差异较大,商务服务业等大多数行业的税负将减轻,但租赁业等部分行业的税负可能会加重,税改后的增值税税率水平选择与中间投入比率是影响各营业税行业税负变动的主要因素.为了促进行业间税负公平,减少增值税“扩围”改革对行业发展的不利影响,有必要适当降低租赁业、交通运输业的税率水平.