TY - JOUR
T1 - Opposites attract
T2 - The effect of the federal income tax code on community composition
AU - De Bartolomé, Charles A.M.
AU - Rosenthal, Stuart S.
N1 - Funding Information:
URosenthal gratefully acknowledges financial support from the Real Estate Institute of British Columbia and the Social Science and Research Council of Canada SSHRC). We thank James Alm, Robert Helsley, William Hoyt, and William Strange for helpful comments.
PY - 1997/7
Y1 - 1997/7
N2 - If houses in two homogeneous but dissimilar communities are reorganized as a single heterogeneous community, property tax payments are shifted from owners of small houses to owners of large houses. We consider three aspects of the federal income tax code which causes this shifting to raise aggregate property values in the heterogeneous community. First, the property tax is deductible and the tax rate structure is progressive. Second, some families do not itemize. Third, the restriction on saving in tax-deferring assets suggests the use of different interest rates to capitalize future property taxes. Because of these aspects, heterogeneous communities are established provided the different family types desire similar levels of public service.
AB - If houses in two homogeneous but dissimilar communities are reorganized as a single heterogeneous community, property tax payments are shifted from owners of small houses to owners of large houses. We consider three aspects of the federal income tax code which causes this shifting to raise aggregate property values in the heterogeneous community. First, the property tax is deductible and the tax rate structure is progressive. Second, some families do not itemize. Third, the restriction on saving in tax-deferring assets suggests the use of different interest rates to capitalize future property taxes. Because of these aspects, heterogeneous communities are established provided the different family types desire similar levels of public service.
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U2 - 10.1006/juec.1996.2012
DO - 10.1006/juec.1996.2012
M3 - Article
AN - SCOPUS:0040007475
SN - 0094-1190
VL - 42
SP - 18
EP - 41
JO - Journal of Urban Economics
JF - Journal of Urban Economics
IS - 1
ER -