housing market responses to transaction taxes evidence from notches and stimulus in the uk we investigate housing market responses to transaction taxes using administrative data on all property transactions in the u k from 2004 to 2012 combined with quasi experimental variation from tax notches and tax stimulus we present two main findings first transaction taxes are highly distortionary across a range of margins causing large distortions to the price volume and timing of property transactions secondly temporary transaction tax cuts are an enormously effective form of fiscal stimulus a temporary elimination of a 1 transaction tax increased housing market activity by 20 in the short run due to both timing and extensive responses and less than half of the stimulus effect was reversed after the tax was reintroduced due to re timing because of the complementarities between moving house and consumer spending these stimulus effects translate into extra spending per dollar of tax cut equal to about 1 we interpret our empirical findings in the context of a housing model with downpayment constraints in which leverage amplifies the effects of transaction taxes

e ztax tax salience and tax rates this paper examines whether the salience of a tax system affects equilibrium tax rates i analyze how tolls change after toll facilities adopt electronic toll collection etc drivers are substantially less aware of tolls paid electronically i estimate that in steady state tolls are 20 to 40 percent higher than they would have been without etc consistent with a salience based explanation for this toll increase i find that under etc driving becomes less elastic with respect to the toll and toll setting becomes less sensitive to the electoral calendar alternative explanations appear unlikely to be able to explain the findings

is it fair to make work pay the design of the income transfer program for the lower incomes is a hot issue in current public policy debate should we stick to a generous welfare state with a sizeable basic income but high marginal tax rates for the lower incomes and thus little incentives to work or should we make work pay by subsidizing the work of low earners but possibly at the cost of a smaller safety net we think it is difficult to answer this question without making clear what individuals are held responsible for and what not first we present a new fair allocation coined a pareto efficient and shared resources equivalent pese allocation which compensates for different productive skills but not for different tastes for working we also characterize a fair social ordering which rationalizes the pese allocation second we illustrate the optimal second best allocation in a discrete stiglitz 1982 1987 economy the question whether we should have subsidies for the low earners or not crucially depends on whether the low skilled have a strictly positive or zero skill third we simulate fair taxes for a sample of belgian singles our simulation results suggest that making work pay policies can be optimal according to our fairness criterion but only in the unreasonable case in which none of the unemployed are ever willing to work

approaches to inequality of opportunity principles measures and evidence we put together the dierent conceptual issues involved in measuring inequality of opportunity discuss how these concepts have been translated into computable measures and point out the problems and choices researchers face when implementing these measures our analysis identies and suggests several new possibilities to measure inequality of opportunity the relevance of the conceptual issues and modelling choices are illustrated with ndings from the empirical literature on income inequality of opportunity

interest rate variations mortgage prepayments and household mobility the volatility of interest rates and the deregulation of the mortgage lending sector have meant that many homeowners also own mortgages at terms more favorable than current interest rates this paper presents a model of residential mobility decisions and an empirical analysis that evaluates the importance of the ownership of these mortgages upon the mobility of homeowners the results based upon proportional and nonproportional hazard models indicate that these effects are quite large the empirical analysis distinguishes between different regulatory regimes that govern the assumption of existing mortgages and indicates the implications of these findings for the pricing and valuation of mortgage backed securities copyright 1987 by mit press

fair income tax fairness is a key concept in redistribution issues in this paper we study how particular requirements of fairness can shed light on the design of the optimal income tax schedule we consider a population of heterogeneous individuals or households who differ in two respects first they have unequal skills and therefore unequal earning abilities second they differ in terms of their preferences about consumption and leisure and as a consequence typically make different labour time choices both kinds of differences generate income inequalities we study how to justify and compute a redistribution income tax in this context redistribution through an income tax usually entails distortions of incentives but the resulting efficiency loss has to be weighed against potential improvements in the fairness of the distribution of resources we address this efficiency equity trade off here by constructing social preferences which obey the standard pareto principle in addition to fairness conditions

optimal tax salience abstract recent empirical work finds that consumers under account for commodity taxes when the after tax price is not prominent i investigate how policymakers may utilize such low salience taxes to promote welfare the optimal combination of high and low salience taxes balances two competing effects low salience taxes dampen distortionary substitution but cause consumers to misallocate their budgets using a stylized model i show the availability of taxes with differing salience provides an extra degree of freedom that can be used to implement the first best welfare outcome i characterize the optimal policy and derive a formula for incremental adjustments when the first best is unattainable

measures of distributional change an axiomatic approach in recent years a number of interesting papers have appeared in the general field of the analysis of changes in a frequency distribution the most common applications of such analysis are in the areas of income and wealth re distribution and the contributions have usually focussed on a particular specialised issue such as mobility of individuals within a structure or of horizontal inequity as opposed to vertical inequality implicit in the comparison of two distributions a number of approaches to each of these problems have been suggested and indeed several specific practical indices of mobility or inequity have been proposed 1 whilst some of these can be shown to have very useful features in their application it is probably fair to say that most derive from an ad hoc approach to the particular aspect of the problem on which the author had focussed it is interesting to note that comparatively few papers attempt to exploit the similarities involved in each of these issues all this contrasts rather sharply with the state of play in an obviously closely related game that of the measurement of inequality much of the essential foundation of the problem of measuring inequality as we presently understand it seems to be more or less sorted out in a systematic fashion roughly speaking what may be done is as follows given

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

queues rations and market comparisons of outcomes for the poor and the rich this paper presents a positive comparison of the outcomes of several alternative allocation systems the queue system convertible and nonconvertible rations and the unhindered market to distribute the limited quantity of a deficit good among heterogeneous individuals the authors show that for the poor the ranking of systems from better to worse is convertible rations nonconvertible rations the queue system and nonintervention the rich are found to be better off under nonintervention than under other systems these and other results are notably robust not only to many parameters of the economy but also to certain types of commodity taxes and administrative costs copyright 1987 by american economic association

taxpayer confusion evidence from the child tax credit we develop an empirical test for whether households understand or misperceive their marginal tax rate our identifying variation comes from the loss of the child tax credit when a child turns 17 using this age discontinuity we find that despite this tax liability increase being lump sum and predictable households reduce their reported wage income upon discovering they have lost the credit this finding suggests that households misinterpret at least part of this tax liability change as an increase in their marginal tax rate this evidence supports the hypothesis that tax complexity can cause confusion and leads to unintended behavioral responses jel d12 d14 h24 h31

house price responses to a national property tax reform abstract we show that house prices in general did not respond to a substantial cut in the national property tax in sweden the estimates are based on rich register data covering more than 100 000 sales over a time period of two and a half years because the swedish property tax is national and thus unrelated to local public goods our setting is ideal for causal identification of the property tax on house prices we observe price increases only in a small segment of the market containing properties with very high tax values we discuss but can admittedly not empirically discriminate between several potential explanations for why we find no evidence of capitalization except for the top segment of the market

you can take it with you proposition 13 tax benefits residential mobility and willingness to pay for housing amenities abstract the endogeneity of prices has long been recognized as the main identification problem in the estimation of marginal willingness to pay mwtp for the characteristics of a given product this issue is particularly important in the housing market since a number of housing and neighborhood features are unobserved by the econometrician this paper proposes the use of a well defined type of transaction costs moving costs generated by property tax laws to deal with this type of omitted variable bias california s proposition 13 property tax law is the source of variation in transaction costs used in the empirical analysis beyond its fiscal consequences proposition 13 created a lock in effect on housing choice because of the implicit tax break enjoyed by homeowners living in the same house for a long time its importance to homeowners is estimated from a natural experiment created by two amendments that allow households headed by an individual over the age of 55 to transfer the implicit tax benefit to a new home indeed 55 year old homeowners have 25 higher moving rates than those of comparable 54 year olds these transaction costs from the property tax laws are then incorporated into a household sorting model the key insight is that because of the property tax laws different potential buyers may have different user costs for the same house the exogenous property tax component of this user cost is then used as an instrumental variable i find that mwtp estimates for housing characteristics are approximately 100 upward biased when the choice model does not account for the price endogeneity

liquidity constraints and imperfect information in subprime lending ditions for precisely the population that is most likely to have a difficult time obtaining credit those with low incomes and poor credit histories these consumers who typically cannot qualify for regular bank loans comprise the so called subprime market because the company we study originates subprime loans its loan applications and transaction records provide an unusual win dow into the consumption and borrowing behavior of households that are rationed in primary credit markets moreover we track loan repayments allowing us to analyze the difficulties in lending to the subprime population we begin by documenting the importance of short term liquidity constraints for individuals in our sample we present two pieces of evidence both are based on purchasing behavior and indicate a high sensitivity to cash on hand first we document a dramatic degree of demand seasonality associated with tax rebates overall demand is almost 50 percent higher during tax rebate season than during other parts of the year this seasonal effect varies with household

property tax capitalization in a model with tax deferred assets standard deductions and the taxation of nominal interest previous property tax capitalization studies assume that families itemize that they save in taxable assets and that real interest income is taxed however many families do not itemize many families invest in tax deferred assets and nominal interest income is taxed as a consequence prior studies likely misspecify the property tax capitalization equation for roughly ninety percent of their samples taking federal tax provisions into account increases the precision of our estimated capitalization rate in addition our results suggest that biases in prior studies likely contribute to the variety of capitalization estimates in the literature

equality of opportunity policy and measurement paradigms abstract equality of opportunity is a widely accepted principle of distributive justice and it is the leading idea of most political platforms in several countries according to this principle a society might institute policies that secure an equal distribution of the means to reach a valuable outcome among its members once the set of opportunities have been equalized which particular opportunity the individual chooses from those open to her is outside the scope of justice ex ante inequalities and only those inequalities should be eliminated or compensated for by public intervention the recent literature on the opportunity egalitarianism often merges these questions introducing two different economic issues on one side the design of a public policy intended to implement the equality of opportunity view and on the other side the problem of measuring the degree of opportunity inequality in a society we describe the basic setting and assumptions of some different approaches derived by roemer s algorithm for public policy and then we discuss some theoretical and empirical studies to separate and test alternative paradigms on the measurement of inequality of opportunity accordingly an extended critique on the causality issue on policies and measurements is taken into account

equality of opportunity and luck definitions and testable conditions with an application to income in france abstract we offer a model of equality of opportunity that encompasses different conceptions expressed in the public and philosophical debates in addition to circumstances whose effect on outcome should be compensated and effort which represents a legitimate source of inequality we introduce a third factor luck that captures the random factors whose impact on outcome should be even handed for equality of opportunity to be satisfied then we analyze how the various definitions of equality of opportunity can be empirically identified given data limitations and provide testable conditions definitions and conditions resort to standard stochastic dominance tools lastly we develop an empirical analysis of equality of opportunity for income acquisition in france over the period 1979 2000 which reveals that the degree of inequality of opportunity tends to decrease and that the degree of risk of income distributions conditional on social origin appears very similar across all groups of social origins

inattention to deferred increases in tax bases how michigan home buyers are paying for assessment limits abstract michigan s implementation of assessment limits gives rise to a wide variation in taxable basis across comparable homes exploiting the fact that the resulting differences in property tax liability are temporarily inherited by new homebuyers i estimate the degree of capitalization of these largely idiosyncratic tax differences to evaluate whether homebuyers understand the tax implications of their home purchases consistent with anecdotal evidence but in stark contrast to the traditional view of rational consumer behavior i find that homebuyers are woefully inattentive to the temporary nature of their initial tax obligations resulting in an overpayment of nearly 10 000 for the average home

property taxes mobility and home ownership abstract in contrast with the conventional property tax which is based on current market value the acquisition value property tax is based on the market value of the property at the time it was purchased a switch to an acquisition value tax i decreases household mobility ii increases the likelihood of home ownership among infrequent movers at the expense of frequent movers and iii attracts infrequent movers and repels frequent movers we use a simple simulation model to compute the excess burden of the acquisition value tax with a tax rate of 3 the excess burden is about 4 5 of tax revenue the transfer tax has much larger distortionary effects