A BRAVE EXPERIMENT: KOREA'S RECENT LAND POLICY REFORM AND THE ROLE OF THE LAND HOLDING TAX

Korea's land policy has evolved around the presumption that market intervention is necessary to combat rising prices and speculation. In this paper it is argued, however, that the essence of the land problem is a distributional issue, and that the efforts to selectively punish speculators have had detrimental consequences. Past and present land policy is evaluated from this perspective, and a current policy issue, increasing land holding taxes, is examined. Notwithstanding the theoretical effect of a higher land holding tax, even a radical increase of the tax will not be able to stabilize land prices as long as urban land remains scarce. The government should accelerate deregulation in land use and development.     

TAXING LAND VALUE IS JUST ANOTHER QUESTIONABLE TAX

There has recently been much public debate about the introduction of a land value tax. To its supporters such a tax promises to achieve several goals simultaneously. On closer inspection, however, the arguments in favour of land value taxation are not convincing. On the contrary, the economic foundations on which proponents of this tax rely are dubious, and there are significant legal, moral and practical problems with land value taxation.     

TAXES AND SPECULATIVE BEHAVIOR IN LAND AND REAL ESTATE MARKETS

Land and real estate speculation are common in many countries, and attempts to control them vary in both style and scope. This paper addresses the effectiveness of several approaches to discouraging land and real estate speculation, concluding that land holding taxes, short term gains taxes, and transaction taxes have all proven to be relatively unsuccessful methods of control. The paper discusses housing price booms and busts in the United States, and describes attempts to control speculation, notably the Vermont Land Gains Tax, the Taiwan Land Value Increment Tax, and the Real Property Gains Tax of Japan.     

The Vermont Land Gains Tax Experience With It Provides a Useful Lesson in the Design of Modern Land Policy

Abstract . Vermont is currently the only state which employs a special capital gains tax on certain land sales. A comparison between the Vermont land gains tax and Henry George's Single Tax provides a useful lesson in the design of modern land policy. The Vermont tax is aimed at discouraging short run land speculation, while the Single Tax seeks to discourage the long term quasimonopoly of land ownership. The Single Tax would capture unearned increments to land value while the Vermont tax applies only to realized capital gains and tends to reward long term speculators. An empirical analysis of the Vermont tax reveals that tax revenues have been small, and that the tax has not prevented a rise in land values. In fact, the Vermont tax may have increased land prices by restricting available land supply. Although the Vermont tax intended to curb speculation and reduce land subdivision activity, it is not a substitute for land use planning and carefully designed growth control ordinances and regulations.     

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.     

1. The Role of Land Markets in Economic Crises

It is widely recognized that the economic crisis of 2009 was caused by unsound lending for real estate. Largely ignored, however, is that this contraction was easily predicted on the basis of a well-established pattern of land speculation, premature subdivision, and excessive building on marginal land that recurs approximately once every 18 years. Capital locked up in projects that are started during a land bubble is effectively lost during the downturn, leaving the nation without sufficient capital to finance ordinary business operations during the recovery period. The best instrument for avoiding this boom-bust cycle is the property tax and, more specifically, the portion that falls on land. We explore here the ways in which the property tax influences the intensity, timing, and location of development. We also examine why frequent and accurate assessment are essential to make the property tax an effective method of preventing speculative real estate bubbles.     

TAX COMPETITION AS A CAUSE OF FALLING CORPORATE INCOME TAX RATES: A SURVEY OF EMPIRICAL LITERATURE

Abstract Since the mid 1980s, tax rates on corporate income have declined in most industrialized countries. Tax competition between countries for mobile capital has frequently been mentioned as an explanation for this development. A vast empirical literature dealing with tax competition for mobile capital has emerged. This paper categorizes and summarizes the existing empirical studies on this issue. Particular focus is placed on the isolation of the substantive implications the quantitative study outcomes convey. Given the empirical evidence surveyed, it appears that tax rates indeed decline due to tax competition between countries, and in particular due to competition for profits. In addition to summarizing the substantive implications of the existing empirical literature, the paper addresses the question of whether the existing studies can convincingly isolate tax competition as a driver of falling corporate income tax rates.     

INTERNATIONAL TAX COMPETITION AND DOUBLE TAXATION

This paper examines international tax competition, with respect to both corporate income tax rates and tax rules for double taxation. Unlike existing studies, this study assumes that governments set non-discriminatory tax rates on domestic- and foreign-sourced corporate income and can choose no tax allowance as the tax rule. Consequently, the Nash equilibrium outcomes contradict the intuition underlying previous studies: no tax allowance is chosen as the tax rule where world economic welfare can be maximized. A capital-exporting country gains whereas a capital-importing country loses, compared to the case where there is a tax allowance of any kind.     

Neighborhood Revitalization and New Life: A Land Value Taxation Approach

When a neighborhood declines, the poor get poorer, crime rises, and those who can leave the area. The tax base shrinks, so the rates paid by those least able to pay increase. The prevailing system of a low tax on land values leads to land speculation and private land banking, assuring that the landowner can hold out for a very high price for a very long time. A higher tax on land values (coupled with reduction in building taxes) creates an incentive to sell that land or do something with it rather than waiting. In cities that use land‐value taxes, real‐estate markets start to work again and neighborhoods recover. Clairton, Pennsylvania's adoption of a land‐value‐taxation system demonstrates the neighborhood revitalization to which it leads, as owner‐occupied residences and multi‐family units saw a relief in their tax burden. In contrast, vacant properties' contribution to the city budget tripled, providing the resources to pay for the education of Clairton's children and liberate working and middle‐class families from the bonds of labor and capital taxation.     

Land Prices and Tax Policy: A Study of Fiscal Impacts

A bstract . Various tax measures are in use in efforts to control the level of land prices and to moderate changes in them. These are the site value, vacant land, increment value and transfer taxes. Analysis indicates that sufficiently heavy site value taxes can help stem the rise in land prices and that relatively heavy vacant land taxes can be used to encourage the development of certain urban land. Both instruments may bring forward the time of development. Both are perhaps the best tax tools for controlling speculation. Significant problems seem likely to attend the use of land value increment and transfer taxes applied at high rates. Non-tax alternative or complementary measures are also analyzed.     

浅谈房地产项目土地增值税的纳税筹划

对于房地产行业来讲,在近年来的发展中,国家出台了相关宏观政策,对该行业进行了调整,所以房地产企业的发展受到了一定程度的影响,许多企业在发展过程中由过去的粗放式管理模式向精细化管理模式转变。房地产企业在盈利的过程中,需要向政府及相关土地部门缴纳土地增值税,这对于企业自身的盈利能力以及现金流会产生较大的影响,所以房地产企业针对土地增值税进行纳税筹划具有非常重要的意义。论文以土地增值税纳税筹划的积极意义为出发点,论述了纳税筹划工作的原则及方法。     

Pennsylvania's Success with Local Property Tax Reform

A bstract Fifteen cities in Pennsylvania are pioneering an innovative approach to local tax reform that harnesses market incentives for urban renewal .
Opting for the so-called "two-rate" or "split-rate" property tax , these cities are lowering taxes on buildings, thereby encouraging improvements and renovations , while raising the tax on land values, thus discouraging land speculation . The resulting infill development as indicated by increased building permits means downtown jobs , efficient use of urban infrastructure, an improved housing stock, and less urban sprawl .
Cities in other states are poised to follow Pennsylvania's example.     

LAND USE PLANNING: PUBLIC OR PRIVATE CHOICE?

Focusing on house prices and residential densities, this paper offers a comparative institutions account of the likely performance of public and private land use planning regimes. The analysis suggests that whilst far from 'perfect,' a system of private land use planning is likely to offer a more effective way of balancing the costs and benefits of land use change than a government-driven system.     

DEVELOPMENT OF REGIONAL SOCIAL ACCOUNTING MATRICES WITH DETAILED AGRICULTURAL LAND RENT DATA AND IMPROVED VALUE-ADDED COMPONENTS FOR THE USA

We describe a method for creating social accounting matrices (SAMs) with detailed agricultural land rent data for any arbitrary subset of the 48 contiguous states in the USA. Data on land use and land rents from various public sources is merged with national accounts data. The method reorganizes the rental income of persons concept present in national accounts to payments to conventional primary factors of production. This method also reallocates portions of the indirect business tax account to the appropriate sales and import tax accounts. SAMs created using this method should be useful inputs into input–output or computable general equilibrium models explicitly representing a heterogeneous land market and analyzing the economic effects of agricultural, bioenergy, water and climate policies on land-use change, land rents, agricultural commodity markets, trade and households’ welfare. The method's implementation is freely available, enabling others to rapidly create SAMs with their own desired region and sector aggregations.     

HARMFUL TAX COMPETITION?

European governments are currently engaged in an assault on tax havens, to stamp out what they call 'unfair tax competition.' This article examines and rejects the arguments they use to justify this action and shows that tax competition is (like all forms of competition) beneficial, except perhaps as practised by European governments themselves.     

LAND TAXATION AND ITS IMPACT ON LAND PRICE: The Case of Japan in the 1990s

The multifold increases in land prices in Tokyo, at first, and in other major cities of Japan, later, during the last half of the 1980s brought forth government proposals to strengthen the land holding taxes which were very low in the past. This paper analyzes the background of these developments as well as their rationales, and looks at possible consequences of planned increases in land holding taxes. It is argued that the rivalry between the Ministry of Finance and the Ministry of Local Autonomy is leading to a situation in which unexpectedly heavy land holding taxes will be imposed in the near future, lowering the price of land to much less than half of what it was in the past.     

On the “Lock-In” Effects of Capital Gains Taxation

The most important drawback of a tax on realized capital gains is its “lock-in” effect. This paper uses a simple land development model to examine the distortion that the lock-in effect generates. A surprising result is that the lock-in effect does not arise if the basis for the capital gains tax (usually the price at which the current owner acquired the land) is sufficiently high. Rather than delaying the sale, the owner sells the land as soon as possible even if the land will be developed much later. In this case, the capital gains tax creates no “real” distortion because it does not affect the development time. In particular, if the basis is the price formed under perfect foresight, the lock-in effect never arises.     

The timing of residential land development: A general equilibrium approach

A formal model of the development process is constructed in order to arrive at a better understanding of the land development process, the change in land prices over time, and the effects of public policy on these variables. The relationship between the rate of interest and the rate of price appreciation on land is shown to depend upon development costs, agricultural opportunity costs, market structure, and the level of Ricardian rents on land. The effects of a land tax and a capital gains tax on the rate of development are also analyzed.     

Problems in Acquiring Mineral Revenues for Financing Economic Development: A Case Study of Zambia During 1970–78

A bstract . During the 1970s Zambia granted tax incentives to transnational mining companies (thereby foregoing some revenue ) in order to achieve expected investment benefits to the economy and government. The Government also acquired ownership interests in the companies via asset acquisition. Global market forces turned against Zambia's interests, and expected benefits were not forthcoming because company profits had become the sole tax base in the mineral sector. Zambia's experience from 1970 to 1978 suggests that it and other mineral export countries should (a) evaluate carefully whether reducing the effective tax rate on company profits actually induces investment , and (b) consider thoroughly whether a tax scheme that includes a proper mix of profit, mineral and export levies is more appropriate than a single tax base.     

WHAT MOTIVATES TAX COMPLIANCE?

In this paper, I review and assess what we have learned about what motivates individuals to pay – or to not pay – their legally due tax liabilities. I focus on three specific questions. First, what does theory say about what motivates tax compliance? Second, what does the evidence show? Third, how can government use these insights to improve compliance? I conclude with some suggestions – and some predictions – for future research.