Consider the general-equilibrium view of the structure portion of the property tax. In Vancouver, Empty Homes Tax
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Question:
Consider the general-equilibrium view of the structure portion of the property tax. In Vancouver, Empty Homes Tax (Vacancy Tax) of 1% of the property's value has been imposed since 2016. Suppose that the vacancy tax increases the supply of structures in Vancouver. Following our model of local government revenue, we assume there is fixed land supply, mobile supply of capital and perfectly mobile consumers.
- Identify and explain the price effects for structure owners in Vancouver.
- Identify and explain the price effects for structure owners in the other city.
- Identify and explain the price effects for landowners in Vancouver.
- Identify and explain the price effects for landowners in the other city.
- Explain the reallocation of structures between Vancouver and the other city.
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