Taxing Property in Developing Countries: Theory and Evidence from Mexico / Anne Brockmeyer, Alejandro Estefan, Karina Ramírez Arras, Juan Carlos Suárez Serrato.

Format:

Book

Author/Creator:

Brockmeyer, Anne.

Contributor:

National Bureau of Economic Research.

Estefan, Alejandro.

Ramírez Arras, Karina.

Suárez Serrato, Juan Carlos.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28637.

NBER working paper series no. w28637

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

We study the most under-utilized tax in developing countries--the property tax--by modeling and estimating the welfare effects of tax rate changes and enforcement. The model shows tax hikes impact welfare by reducing compliance and exacerbating liquidity constraints. Enforcement impacts welfare by subjecting non-compliant taxpayers to threats of fines and property seizure. Empirically, administrative data, sharp tax rate increases, and an enforcement experiment show both policies increase revenue. Tax hikes raise welfare since revenue gains surpass liquidity costs. Enforcement reduces welfare as threat costs overshadow revenue increases. Governments can enhance welfare by raising tax rates rather than escalating enforcement.

Notes:

Print version record

April 2021.