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Unformatted text preview: . The effective price of an asset equals Ĳ 1 asset p , where asset p is the market price of the asset and Ĳ is tax on the return to the asset. Land Value Taxation what they thought would happen: what I thought would happen: Under the proposal, the overall tax burden would remain constant, so the only effect would be a substitution effect . If the isoquants have a nice curved shape, then property owners would substitute out of land and into kapital and their asset returns would be higher. I argued that the isoquants may be L-shaped due to the complementarity between land and buildings. Consequently, the proposal would have no effect on the optimal holdings of land and kapital. T K isoquant when inputs are perfect complements T K Page 92...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10