This study focuses on two potential problems that often arise in the discussions of the feasibility of consumption tax reform: (1) the potential negative effect of a consumption tax reform on the value of owner-occupied housing, and (2) the tendency of such a reform to impose a one-time windfall loss on the owners of existing capital other than owner-occupied housing. The results suggest that the reform-induced one-time windfall tax on the owners of existing assets tends to be overstated in models that do not explicitly account for owner-occupied housing. The study also suggests that the potential decline in the value of owner-occupied housing could be significant, approximately 10 percent of the total value of owner-occupied housing, immediately after reform. However, the value of owner-occupied housing is likely to rebound during the transition, resulting in significant increases in the value of owner-occupied housing in the long run.
| Identifer | oai:union.ndltd.org:RICE/oai:scholarship.rice.edu:1911/19486 |
| Date | January 2000 |
| Creators | Diamond, John William |
| Contributors | Zodrow, George R. |
| Source Sets | Rice University |
| Language | English |
| Detected Language | English |
| Type | Thesis, Text |
| Format | 163 p., application/pdf |
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