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Home Mortgage Interest Deduction: Perspective from Taxation on Savings
Hung, Yi Ju
Hung, Yi Ju
home mortgage interest deduction
taxation on savings
|Issue Date: ||2016-07-20 16:57:09 (UTC+8)|
Negative public opinions on the boom of housing market pressure the government to come up with measures to tame the high-rising housing price, among different policies, the taxation of real estate is the focus of the debate. Nonetheless, most tax reformers aim at speculative tradings and the holding of high-priced real estates, few rethink the tax preferences on owner-occupied housing.
Through an extended two-period life-cycle consumption model with housing savings, we show that tax preferences on owner-occupied housing distort decisions on which to save. Tax preferences provide incentives for individuals to save more through owner-occupied housing due to the home mortgage interest deduction in personal income taxation. Moreover, the tax-free imputed rents add on the tax preferences of owner-occupied housing. Recent financial data show rising real-estate-related debts and tax returns data show increasing income tax expenditures on owner-occupied housing. Both evidences are consistent with the conclusion drawn from the theoretical model.
Overall, the special tax preferences on owner-occupied housing have negative impacts both on efficiency and equity grounds. The so-called “rationale” of providing preferential tax treatment to owner-occupied housing cannot be justified. The issue at hand is how to reform the tax system in order to remove tax preferences on owner-occupied housing, the sooner the better.
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|Source URI: ||http://thesis.lib.nccu.edu.tw/record/#G0103255007|
|Data Type: ||thesis|
|Appears in Collections:||[財務管理學系] 學位論文|
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