I think this tax is fairly theoretical and un-implementable, so predicting second-order impact is not very helpful. More importantly, the size of the tax is more important than the mechanism of calculation for answering the question of what behavioral impact it will have. If the tax is roughly the same amount as current property taxes, it’ll have roughly the same results.
My guess is that urbanization would slow a little bit with real-estate taxes two or three times higher than today, but probably not stop. over time, differential tax rates will and do shift some people and operations toward lower-tax jurisdictions, but unless it’s egregious, it’s hard to overcome the network effect of being physically near other successful people/businesses.
I think this tax is fairly theoretical and un-implementable, so predicting second-order impact is not very helpful. More importantly, the size of the tax is more important than the mechanism of calculation for answering the question of what behavioral impact it will have. If the tax is roughly the same amount as current property taxes, it’ll have roughly the same results.
My guess is that urbanization would slow a little bit with real-estate taxes two or three times higher than today, but probably not stop. over time, differential tax rates will and do shift some people and operations toward lower-tax jurisdictions, but unless it’s egregious, it’s hard to overcome the network effect of being physically near other successful people/businesses.
I don’t see why it’s unimplementable. Do you mean politically difficult? That shouldn’t detract from our ability to analyze the effects.
This is a concrete way to answer the question “is it distortionary”
I’m imagining a federal tax that’s the same everywhere.
Can you explain why?