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Do changes in the rates of progressive income taxation lead to changes in the distribution of housing wealth of households?

Drejer Jensen, Mark LU (2015) NEKN01 20152
Department of Economics
Abstract
The main hypothesis of this thesis revolves around the effects of changes in taxation of income on changes in the housing wealth of households. Two general conclusions arose from the analysis. Firstly, a percentage point increase in the top marginal income tax rate was associated with an economically significant decrease in regional inequality of housing wealth of households of 0.48 percentage points. Secondly, a percentage point increase in the bottom marginal income tax rate was associated with a statistically and economically significant decrease in regional inequality of housing wealth of households of 0.34 percentage points. Due to the thoughts of Stiglitz on the determinants of housing wealth inequality, the need for progressive... (More)
The main hypothesis of this thesis revolves around the effects of changes in taxation of income on changes in the housing wealth of households. Two general conclusions arose from the analysis. Firstly, a percentage point increase in the top marginal income tax rate was associated with an economically significant decrease in regional inequality of housing wealth of households of 0.48 percentage points. Secondly, a percentage point increase in the bottom marginal income tax rate was associated with a statistically and economically significant decrease in regional inequality of housing wealth of households of 0.34 percentage points. Due to the thoughts of Stiglitz on the determinants of housing wealth inequality, the need for progressive taxation of wealth on the supranational level, as proposed by Thomas Piketty, is questioned. However, if the general thoughts of Piketty are taken as correct in determining the trends of inequality in wealth, other determinants of wealth, as for instance components of other private physical and immaterial capital, cannot be ignored when analyzing the trends of wealth inequality. Hence, progressive wealth taxation on the supranational level may not be entirely unnecessary. Lastly, the measure of regional inequality of housing wealth of households used throughout this study, namely the gap of growth rates of property prices between the most expensive city of a country in terms of housing, and the country as a whole, was found inadequate for future work. For this reason, a measure such as a Gini-coefficient of wealth would be preferred in future work, given increased future compilation and publishing of data on wealth inequality. (Less)
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author
Drejer Jensen, Mark LU
supervisor
organization
course
NEKN01 20152
year
type
H1 - Master's Degree (One Year)
subject
keywords
Wealth, Inequality, Housing, Taxes, Property
language
English
id
8057879
date added to LUP
2015-11-05 10:57:26
date last changed
2015-11-05 10:57:26
@misc{8057879,
  abstract     = {The main hypothesis of this thesis revolves around the effects of changes in taxation of income on changes in the housing wealth of households. Two general conclusions arose from the analysis. Firstly, a percentage point increase in the top marginal income tax rate was associated with an economically significant decrease in regional inequality of housing wealth of households of 0.48 percentage points. Secondly, a percentage point increase in the bottom marginal income tax rate was associated with a statistically and economically significant decrease in regional inequality of housing wealth of households of 0.34 percentage points. Due to the thoughts of Stiglitz on the determinants of housing wealth inequality, the need for progressive taxation of wealth on the supranational level, as proposed by Thomas Piketty, is questioned. However, if the general thoughts of Piketty are taken as correct in determining the trends of inequality in wealth, other determinants of wealth, as for instance components of other private physical and immaterial capital, cannot be ignored when analyzing the trends of wealth inequality. Hence, progressive wealth taxation on the supranational level may not be entirely unnecessary. Lastly, the measure of regional inequality of housing wealth of households used throughout this study, namely the gap of growth rates of property prices between the most expensive city of a country in terms of housing, and the country as a whole, was found inadequate for future work. For this reason, a measure such as a Gini-coefficient of wealth would be preferred in future work, given increased future compilation and publishing of data on wealth inequality.},
  author       = {Drejer Jensen, Mark},
  keyword      = {Wealth,Inequality,Housing,Taxes,Property},
  language     = {eng},
  note         = {Student Paper},
  title        = {Do changes in the rates of progressive income taxation lead to changes in the distribution of housing wealth of households?},
  year         = {2015},
}