The tax treatment of homeowners and landlords and the progressivity of income taxation
By: by Matthew Chambers, Carlos Garriga, and Don Schlagenhauf.
Contributors: Garriga, Carlos.; Schlagenhauf, Don E.; Federal Reserve Bank of St. Louis.
Series: Working paper -- 2007-053A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-053A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: [St. Louis, Mo.]
Language: eng
Format: Electronic resource
Subjects: Homeowners -- Taxation -- United States.; Rental housing -- United States.; Income tax -- United States.
Description: "This paper analyzes the connection between the asymmetric tax treatment of homeowners and landlords and the progressivity of income taxation using a quantitative overlapping generations general equilibrium model with housing and rental markets.  Our model emphasizes the determinants of tenure choice (own vs.  rent) and the household decision to supply housing services to the rental market.  This formulation breaks the link between the rental price and the equilibrium interest rate and, hence, the aggregate supply of rental property responds differently to the direction of rental price changes, marginal tax rate changes, and maintenance cost changes.  We show that the model replicates the key factors and the distributional patterns of ownership, house size, and landlords.  The degree of progressivity in the income tax code has important implications for housing tenure and housing consumption.  We find a movement toward a less progressive income tax code can generate sizeable increases in homeownership and welfare that result from the equilibrium effects and a portfolio reallocation mechanism absent in economies with a single asset (i.e.  Conesa and Krueger (2006)).  An examination of the removal of existing asymmetries in the tax code are found to have effects on housing that differ from those reported in the literature.  We show that housing policy can increase the ownership rate of a particular segment of the population, but generate nontrivial distributional costs.  The welfare increases are no larger than those found when the progressivity of the tax code is reduced"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 1/7/2008.

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