Income taxes, property values, and migration

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Income taxes, property values, and migration

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Title: Income taxes, property values, and migration
Author: Glazer, Amihai; Kanniainen, Vesa; Poutvaara, Panu
Abstract: We consider 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 then affect property values, and can induce migration, which further affects property values. We show 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 and only if the relative pre-tax income of the poor is sufficiently low.
URI: http://hdl.handle.net/10398/7689
Date: 2008-12-05

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