Community Classification and Growth in Effective Property Tax Rates: A Case Study of Rate Divergence in 39 Rhode Island Towns

Abstract . A multiple regression analysis of cross-sectional data for 39 Rhode Island towns indicates that variation in the level of effective property tax rates among communities can be substantially explained. The determinants are a community's population density, median family income, real property per capita, and the ratio of commercial to total property tax, revenue. Population density serves as a criterion for judging the “cityness” (1) of a community, that is, its degree of urbanization. A positive relationship exists between population density and effective property tax rate. Communities with the highest population density tend to have the highest tax rates. This relationship is shown in each analyzed year. Covariance analysis applied to the regression coefficients for the various years reveals a significant change in the population density coefficient. This coefficient change indicates a divergence in effective property tax rates among city, suburban, and rural communities.     

Why truck distance taxes are contagious and drive fuel taxes to the bottom

This paper analyzes the way in which countries with international and local truck traffic decide to switch from a simple fuel tax system to a dual system of fuel and distance charge taxes. We show what drives a country to switch and how this affects the level of fuel taxes as well as incentives for other countries to also adopt the dual system. The model is partially able to explain the gradual extension of kilometer charging for trucks in Europe. The model also shows that, in the absence of diesel cars, the gradual introduction of kilometer charges will make fuel taxation for trucks virtually disappear and will lead to a system where truck use is (1) taxed mainly based on distance, (2) is taxed too heavily, and (3) where highest distance taxes are expected in transit countries with a strong market position. When the fuel tax must in addition serve as an externality tax for diesel cars, the introduction of distance charges for trucks will give rise to diesel taxes that are lower than the external cost of diesel cars. For trucks, this leads to a sum of diesel taxes and distance charges that are higher than the external cost of trucks.     

论我国房产税的计税依据

我国将稳步推进房产税的改革,而在改革的过程中需要准确界定房产税的计税依据。为此本文首先分析和比较了面积、市场价值和租金收入三种类型的房产税计税依据的优点和缺点,在此基础上结合公平性的要求、我国现行税收征管水平以及房地产市场现状等情况,提出我国应以市场价值为基准确定房地产税税基。对于房地产市场价值的评估办法,笔者认为居住用房地产价值的评估应该采用“城乡有别”的办法——城市和县城的居住用房地产采用市场比较法进行价值评估;农村地区的房地产采用重置成本法进行价值评估;对于营业用房地产,则采用收益法评估其市场价值。     

房地产税改革与土地财政困局破解——基于对地方财政影响的情景分析

地方政府过度依赖土地出让收入是当前中国公共管理面临的重要难题。改革房地产税制并触发土地制度的连锁反应是破解中国土地治理困局的基本出路。通过预测不同改革方案下典型城市住房相关土地财政收入变化,评估房地产税替代土地出让（纯）收益成为地方支柱性收入源的前景。研究发现,如果合理设计覆盖城市存量和新增住房的房地产税,可在短期内保证地方土地财政收入的相对稳定,并在远期实现房地产税替代土地出让金成为地方财政支柱的目标,增强土地财政收入的可持续性。近期政府应改变“重流转、轻保有”的状况,将房地产税培育成为地方主体税种,远期应推进城乡一体化土地市场体系、土地出让制度和土地增值税制度联动改革,使地方土地财政收入从以一次性的土地出让纯收益为主向以持续的房产保有税、土地增值税等为主转变,促进政府土地管理本位职能回归,破解土地财政与政府治理困局。     

Charitable Donations and the Estate Tax: A Tale of Two Hypotheses

Regression studies have suggested that reducing estate‐tax rates would lead to a net reduction in total charitable donations distributed at death. Not only is this notion counterintuitive, our empirical analysis yields the contrary conclusion: overall donations would increase. In rationalizing this donation‐decline outcome, investigators have pointed to the tax deductibility of donations in assessing estate‐tax liability. These efforts, we show, are dubious. The view that donations will decline is also shown to be inconsistent with axioms of generally accepted economic theory. Two distinct sets of indifference curves that imply these two antithetical views are suggested, their observable predictions derived and compared to the relevant evidence, showing that the increasing‐donation hypothesis is confirmed, offering overall a clear challenge to the decline‐in‐donation position. Our empirical results suggest that most estate‐tax payers possess indifference curves consistent with those that embody the increasing‐donation hypothesis.     

Regression‐Kink Approach for Wage Effect on Male Work Hours

In finding the effect of after‐tax wage rate on work hours, the main difficulty is the endogeneity of after‐tax wage rate that equals ‘one minus average tax rate’ times wage rate. To overcome this endogeneity problem, we take advantage of jumps in the marginal income tax rate, which is a regression discontinuity (RD) idea. This RD, in turn, makes the average income tax rate ‘kink‐continuous’, which is a regression kink (RK) idea. We provide a simple economic model resulting in the RD and RK features, explain how to implement RK in practice, and then apply our methods to Korean male data. Our main RK‐based labour supply elasticity estimate 7.16% turned out to be insignificant with t‐value 1.52, but it is much larger than most estimates in the literature. This may be attributed to, among other things, the facts that the RK instrument is unique, that RK identifies only the local elasticity at the kink point and that RK requires large data as regression derivatives are estimated.     

The Impact of Differential Assessments on the Property Tax*

Abstract . This paper is focused on the interaction between property tax revenue and assessment policy in New York City between 1961 and 1971. It examines the observed changes in real rates at which different types of property are taxed and examines possible rationales for the different real rates of taxation applied to properties of different types.     

Value and liquidity under changing market conditions

Papers studying the liquidity of a market tend to focus on decisions involving the trade-off between the selling price and the time-till-sale for a given set of market conditions. This paper characterizes market conditions using a price-probability locus; a change in market conditions is some combination of changes in the level and/or slope of this locus. I show how the effect of either type of change on price and on the probability-of-sale can be decomposed into those commonly associated with an increase in the value and those which involve a substitution between price and probability. Two adding-up conditions restrict the set of possible predictions. Though the discussion focusses on real estate market, where scarcity is rationed by a mechanism which combines search and bargaining, the same ideas apply to markets with other types of selling mechanisms.     

Groundwater and the Land Value Tax

Abstract . Application of the land value tax has been described for many natural resources. However, the problems encountered with flowing underground resources have not been fully discussed. Groundwater is one such flowing resource that affects the value of surface land. The underground water is also subject to its own market forces. If a Georgist tax is to be applied to groundwater or to land affected by it, the administrator of the tax must consider the interplay that occurs between the two resource markets. A system of separable property rights to the two resources offers the prospect for efficient use. But the monitoring of ground water use must accompany such a separation.     

Capitalization of local fiscal differentials: Inferences from a disequilibrium market model

This study analyzes tax capitalization within the framework of a disequilibrium market model. In particular, this study examines whether local fiscal differentials influence the rate of change in neighborhood house prices over time. Local fiscal differentials existing in 1970 are found to have no influence on the rate of change in neighborhood house prices over the period 1970–1972; therefore, the study concludes that, other things being equal, these local fiscal differentials have been completely capitalized in price levels.     

Carry-trades on the yen and the Swiss franc: are they different?

Using monthly data from 1986 to 2009 for 11 major currencies against the U.S. dollar (USD), we find that interest rate differentials between nine of these currencies are generally positive (sample mean of 0.86%) but are strongly negative for Japan (mean of ?2.78%) and for Switzerland (mean of ?2.22%). Investigating empirical models of nominal exchange rate changes we find for all panels that about 2% of real exchange rate misalignments are corrected in the following month. We also find important differences across samples and for the two carry-trade currencies the key results are as follows. First, interest rate differentials have a negative impact on exchange rates: higher paying currencies should appreciate, contrary to the ex-ante uncovered interest rate parity (UIP) condition. We find that this result is very robust to money supply (M1) differentials serving as instrumental variables to inflation rates. In addition, these two currencies depreciate slightly when money supply (M1) differentials increase. Second, dummy variables for periods of market turmoil suggest a particularly strong appreciation of these currencies against the USD, consistent with the unwinding of carry-trade activities.     

Delaying integration of immigrant labor for the purpose of taxation

Delayed integration (DI) is a rule for taxing migrants. It requires that immigrants be taxed in the host country only after some period of transition. Conversely, emigrants are released from the obligation to pay taxes only after a certain period. DI is an alternative to the Employment Principle and the Home-Country Principle. The former governs the international taxation of labor. The latter is a close substitute for the Nationality Principle, on which US tax law is based. The paper studies DI in a setting which allows one to trade off the efficiency costs of distortionary taxation and of wasteful government.     

World Economic Prospects

Overview: A world with higher inflation

• Our world GDP growth forecasts are unchanged this month, at 2.6% for 2017 and 2.9% in 2018. But we expect a sizeable increase in inflation, to 3.3% in 2017 from an estimated 2.8% in 2016, as the effect of higher oil prices feeds through.
• Global indicators continue to point to a pick‐up in activity towards the end of last year, driven by stronger manufacturing activity. The global manufacturing PMI rose to the highest level in almost three years in December, while the composite index – which includes services – was at a 13‐month high.
• World trade should be underpinned by stronger growth in the US (2.3% in 2017 and 2.5% in 2018), bolstered by the anticipated effects of President Trump's expansive fiscal policies. That said, uncertainties around our central forecast are unusually high given the high level of uncertainty surrounding the Trump administration. Encouragingly, there are increasing signs that the tighter labour market is leading to a pick‐up in wage inflation in the US, which will support consumers.
• Given these reflationary trends, we expect two increases in the Federal funds rate this year and US bond yields are likely to continue to rise. The widening of interest rate differentials between the US and the Eurozone will drive the euro down to parity with the US dollar by end‐2017 for the first time since 2002.
• We have revised our Brexit assumptions this month. We now assume that the two‐year period of exit negotiations is followed by a transitional arrangement lasting 2–3 years. This would provide breathing space to negotiate a free trade agreement with the EU.
• Emerging market growth on the whole will improve in 2017 but performance will differ across countries: Russia and Brazil will exit recession, but countries with weak balance of payments positions, high dollar debt and exposure to possible US protectionist actions will be at risk. In China, policymakers are moving to greater emphasis on reducing financial risks and less focus on the 6.5% GDP growth target for 2017. Continued action is also likely to dampen further depreciation of the CNY.

     

The Revenue Potential of Site Value Tax: Extension and Update of General Equilibrium Model With Recent Empirical Estimates of Several Key Parameters

A bstract . Although appealing on the consideration of efficiency, the site ( land ) value tax has been dismissed by some economists as an unviable alternative to the local real estate tax on the ground that it cannot generate sufficient revenue. From earlier work based on a general equilibrium model, however, a switch from a real estate to an equal yield site value tax could result in an increase in equilibrium land prices (and hence the site value tax base). In particular, equilibrium land prices will rise with a site value relative to a real estate tax if: (L+K/L) > e_x. (f_L+ f_k)/f_k. s_x+ e_x. f_L Critical to that theoretical result are the magnitudes of several parameters including the percent land constitutes of total real estate value , (L + K/L), the elasticity of substitution, s_x, the elasticity of demand for real estate e_x, and the output elasticities, f_k and f_L. Based on recent empirical estimates of those parameters, the above stated condition holds.     

Optimal Money Burning: Theory and Application to Corporate Dividends

We explore signaling behavior in settings with a discriminating activity and several costly nondiscriminating ("money-burning") activities. Existing theory provides no basis for selecting one method of burning money over another. When senders have better information about activity costs than receivers, each sender's indifference is resolved, the taxation of a money-burning signal is potentially Pareto-improving, and the use of the taxed activity becomes more widespread as the tax rate rises. We apply this theory to dividend signaling. Its central testable implication—that an increase in the dividend tax increases the likelihood of dividend payout—is verified empirically.     

Taxation, Incentives and Disincentives, and Human Motivation

A bstract . In the national tax debate, many ignore the effect of taxes on human motivation. High—and rising—marginal tax rates must be depressing, hampering and frustrating. They do not spur people on to better performance nor do they reward socially necessary or desirable economic behavior. What they encourage is distortion of resource allocation , legal avoidance and illegal evasion , as well as decline in human and capital resources. At both ends of the income scale they approach confiscation. Land apart from its improvements is taxed lightly when it should be the revenue source of choice taxed the most heavily, while the heaviest exactions discourage labor, enterprise and all human effort as well as savings. Equity and fairness along with the social consequences argue for large cuts in high tax rates at the top and at the bottom of the income scale.     

Political Economy of Property Tax Reform: Hawaii's Experiment with Split‐Rate Property Taxation

Economic theory suggests that switching from a general property tax to a split‐rate tax increases land use efficiency and stimulates urban core development while preserving the environment and reducing urban sprawl. Under split‐rate property taxation, land is typically taxed at a significantly higher rate than improvements. Beginning in 1965 Hawaii experimented with a statewide split‐rate property tax system to encourage economic growth and effect land reform. The experiment was ended in 1977. Following the transfer of property taxing powers to the counties in 1978, some counties brought back the split‐rate property tax at times. Since 2006, Kauai County has adopted the unusual practice of taxing improvements at a higher rate than land for most property classes. This article chronicles and explains the rationale behind Hawaii's state and county experiments with split‐rate property taxation.     

Tax policy and returns to education

This paper considers how asymmetric tax treatment, where labour market earnings are taxed but household production is untaxed, affects educational choice and labour supply. We show that taxes on labour market earnings can generate a large (non-marginal) switch to home production and the ensuing deadweight losses are large. Using a cross-country panel, we find that gender differences in labour supply responses to tax policy can explain differences in aggregate labour supply and years of education across countries.     

Federal Income Tax Reform in the United States: How Did It Happen? What Did It Do? Where Do We Go from Here?

Abstract . The 16th Amendment to the U.S. Constitution in 1913 provided the legal basis for progressive federal income taxes. They now yield revenues of about $450 billion annually. Tax base erosion eventually produced a levy in serious violation of norms of allocation efficiency, distributional equity, and macroeconomic performance. Vested private interests influenced legislators by propaganda and campaign contributions to minimize their tax burdens at the expense of less wealthy taxpayers. The result was an irrational and badly flawed tax structure. In 1981 the maximum marginal tax rate on income from property and wealth was significantly reduced along with other bracket reductions. The income tax reform movement culminated in 1984 to 1986. It expanded the base of the tax while reducing marginal rates as well as brackets, with little change in the distribution of the burden among different income groups but achieving some greater equity in tax liabilities for those with similar incomes.     

Site Value Taxation and Manvel's Land Value Estimates

Replacement of the existing property tax with a. tax on site value requires that the site value base be sufficiently large to generate the same revenue as the existing tax. The adequacy of the site value base is examined in view of Manvel's land value/property value estimates. The conclusion is that only partial replacement may be feasible in many cases, but this may still produce a desirable effect.