Arbeitspapier

Housing and tax policy

In this paper, we investigate the effects of housing-related tax policy measures on macroeconomic aggregates using a dynamic general-equilibrium model. The model features borrowing and lending across heterogeneous households, financial frictions in the form of collateral constraints tied to house prices, and a rental housing market alongside owner-occupied housing. Using our model, we analyze the effects of changes in housing-related tax policy measures on the level of output, tax revenue and household debt, along with other macroeconomic aggregates. The tax policies we consider are (i) increasing property tax rates, (ii) eliminating the mortgage interest deduction, (iii) eliminating the depreciation allowance for rental income, (iv) instituting taxation of imputed rental income from owner-occupied housing and (v) eliminating the property tax deduction. We find that among these fiscal tools, eliminating the mortgage interest deduction would be the most effective in raising tax revenue, and in reducing household debt, per unit of output lost. On the other hand, eliminating the depreciation allowance for rental income would be the least effective. Our experiments also highlight the differential welfare impact of each tax policy on savers, borrowers and renters.

Sprache
Englisch

Erschienen in
Series: Bank of Canada Working Paper ; No. 2013-33

Klassifikation
Wirtschaft
Fiscal Policy
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Production Analysis and Firm Location: Government Policy
Thema
Economic models
Fiscal Policy

Ereignis
Geistige Schöpfung
(wer)
Alpanda, Sami
Zubairy, Sarah
Ereignis
Veröffentlichung
(wer)
Bank of Canada
(wo)
Ottawa
(wann)
2013

DOI
doi:10.34989/swp-2013-33
Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Alpanda, Sami
  • Zubairy, Sarah
  • Bank of Canada

Entstanden

  • 2013

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