Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 12, 2022 erstellt
Beschreibung:
In many countries, including the US, UK and China, households need to pay additional taxes or fees for their second homes, and some choose to avoid such property taxes through voluntary marriage distortions - e.g., by delaying marriage or by divorce. We develop a novel theoretical framework to analyze how such tax-avoidance behavior affects equilibrium outcomes in the housing market, which endogenizes both the households’ tax avoidance and the housing suppliers’ strategic responses. We show that (i) as tax avoidance leads to a lower effective tax, it increases the marginal households’ willingness-to-pay for a second house, and suppliers respond by raising equilibrium housing price; (ii) even though tax avoidance is a voluntary choice of the relevant households, it leads to lower aggregate consumer surplus, exactly because of the higher equilibrium price it induces; (iii) simulation results show that tax avoidance tends to reduce social surplus at relatively low levels of property tax, and increase social surplus at high levels of tax. We discuss several examples where our model can improve policy design problems related to property tax, given different specific policy objectives