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| Author: | Glazer, A. Kanniainen, V. Poutvaara, P. |
| Title: | Income taxes, property values, and migration |
| Journal: | Journal of Public Economics
2008 : APR, VOL. 92:3-4, p. 915-923 |
| Index terms: | models migration property land |
| Freeterms: | values redistribution taxes |
| Language: | eng |
| Abstract: | This paper deals with the effects of income redistribution when people can migrate from one country to another, and when land within each country is heterogeneous. Taxes related to income can affect property values, inducing migration, which further affects property values. It is shown that under these conditions a utilitarian government should never equalize after-tax incomes. If migration is impossible, it may even transfer income from the poor to the rich, reducing the rents earned by absentee landlords. The redistributive tax on the rich may be higher or lower when the rich can migrate than when they cannot. A Rawlsian government in the absence of mobility will equalize after-tax incomes. Under mobility, Rawlsian governments cut their taxes if the relative pre-tax income of the poor is sufficiently low. |
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