TY  - JOUR
AU  - Albouy, David
AU  - Hanson, Andrew
TI  - Tax Benefits to Housing and Inefficiencies in Location and Consumption
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 19815
PY  - 2014
Y2  - January 2014
DO  - 10.3386/w19815
UR  - http://www.nber.org/papers/w19815
L1  - http://www.nber.org/papers/w19815.pdf
N1  - Author contact info:
David Albouy
Department of Economics
University of Illinois at Urbana-Champaign
214 David Kinley Hall
Urbana, IL 61801-3606
Tel: 217-333-0120
E-Mail: albouy@illinois.edu

Andrew Hanson
Department of Economics
Marquette University
P.O. Box 1881
Milwaukee, WI 53201
E-Mail: andrew.r.hanson@marquette.edu
M1  - published as David Albouy, Andrew Hanson. "Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption," in Jeffrey R. Brown, editor, "Tax Policy and the Economy, Volume 28" University of Chicago Press (2014)

M3  - presented at "Tax Policy and the Economy", October 3, 2013
AB  - Tax benefits to owner-occupied housing provide incentives for housing consumption, offsetting weaker disincentives of the property tax. These benefits also help counter the penalty federal taxes impose on households who work in productive high-wage areas, but reinforce incentives to consume local amenities. We simulate the effects of these benefits in a parameterized model, and determine the consequences of various tax reforms. Reductions in housing tax benefits generally reduce inefficiency in consumption, but increase inefficiency in location decisions, unless they are accompanied by tax-rate reductions. The most efficient policy would eliminate most tax benefits to housing and index taxes to local wage levels.
ER  -