Economic Effects of Land Value Taxation in an Urban Area with Large Lot Zoning: an Urban Computable General Equilibrium Approach

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Economic Effects of Land Value Taxation in an Urban Area with Large Lot Zoning: an Urban Computable General Equilibrium Approach Georgia State University ScholarWorks @ Georgia State University Economics Dissertations 8-8-2006 Economic Effects of Land Value Taxation in an Urban Area with Large Lot Zoning: an Urban Computable General Equilibrium Approach Ki-Whan Choi Follow this and additional works at: https://scholarworks.gsu.edu/econ_diss Part of the Economics Commons Recommended Citation Choi, Ki-Whan, "Economic Effects of Land Value Taxation in an Urban Area with Large Lot Zoning: an Urban Computable General Equilibrium Approach." Dissertation, Georgia State University, 2006. https://scholarworks.gsu.edu/econ_diss/11 This Dissertation is brought to you for free and open access by ScholarWorks @ Georgia State University. It has been accepted for inclusion in Economics Dissertations by an authorized administrator of ScholarWorks @ Georgia State University. For more information, please contact [email protected]. PERMISSION TO BORROW In presenting this dissertation as a partial fulfillment of the requirements for an advanced degree from Georgia State University, I agree that the Library of the University shall make it available for inspection and circulation in accordance with its regulations governing materials of this type. I agree that permission to quote from, to copy form, or to publish this dissertation may be granted by the author or, in his absence, the professor under whose direction it was written or, in his absence, by the Dean of the School of Policy Studies. Such quoting, copying or publishing must be solely for scholarly purposes and does not involve potential financial gain. It is understood that any copying from or publication of this dissertation which involves potential gain will not be allowed without written permission of the author. ____________________________________ Signature of the Author NOTICE TO BORROWERS All dissertations deposited in the Georgia State University Library must be used only in accordance with the stipulations prescribed by the author in the preceding statement. The author of this dissertation is: Ki-Whan Choi 10108 Collingwood Lane Alpharetta, Georgia 30022 The director of this dissertation is: Dr. David L. Sjoquist Department of Economics Georgia State University University Plaza Atlanta, Georgia 30303 Users of this dissertation not regularly enrolled as students at Georgia State University are required to attest acceptance of the preceding stipulations by signing below. Libraries borrowing this dissertation for the use of their patrons are required to see that each user records here the information requested. Type of use Name of User Address Date (Examination only or copying) ECONOMIC EFFECTS OF LAND VALUE TAXATION IN AN URBAN AREA WITH LARGE LOT ZONING: AN URBAN COMPUTABLE GENERAL EQUILIBRIUM APPROACH BY Ki-Whan Choi A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy in the Andrew Young School of Policy Studies of Georgia State University GEORGIA STATE UNIVERSITY 2006 ©Copyright by Ki-Whan Choi 2006 ACCEPTANCE This dissertation was prepared under the direction of the candidate’s Dissertation Committee. It has been approved and accepted by all members of that committee, and it has been accepted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Economics in the Andrew Young School of Policy Studies of Georgia State University. Dissertation Chair: David. L. Sjoquist Committee: Geoffrey K. Turnbull Michael J. Rushton Sally Wallace Electronic Version Approved: Roy W. Bahl, Dean Andrew Young School of Policy Studies Georgia State University August 2006 ACKNOWLEDGMENTS First of all, I thank GOD in the name of Jesus Christ. He has saved me from all difficulties and trained me. Second, I thank my mother, my wife (Jeong Ja Kim), two daughters (Ji-Hyeon Choi, and Esther Choi) and a son (Isaac Choi). They have walked with me. Third, I thank Dr. David Sjoquist for his advice. He supported me not only academically, but also financially. Fourth, I thank my committee members (Dr. Geoffrey Turnbull, Dr. Sally Wallace, and Dr. Michael Rushton) for their support. Their comments and suggestions were inspiring. Fifth, I thank Dr. Mark Rider and Dr. Pete Terrebonne as well for their kindness and comments, although they are not committee members. Sixth, I thank the following scholars: Dr. Richard Arnott, Dr. Nicolaus Tideman, Dr. Florenz Plassmann, Dr. Thomas Rutherford, Dr. Jan. K. Brueckner, Dr. Alex Anas, and Dr. Ralph Braid. When I asked questions of them, they replied to me very kindly, although they are scholars from other institutes. Seventh, I thank the following Institutes: Georgia State University (Andrew Young School of Policy Studies), Lincoln Institute of Land Policy, The Robert Schalkenbach Foundation, Korean-American Scholarship Foundation, Saehan Presbyterian Church of Atlanta. Without their financial assistance, I could not have finished this program. Eighth, I thank my church members and the pastor Song. They supported me with love in many ways. Ninth, I thank many other people for their concerns or prayers. iv TABLE OF CONTENTS ACKNOWLEDGEMENTS............................................................................................... iv LIST OF TABLES............................................................................................................ vii ABSTRACT........................................................................................................................x Chapter Page 1. INTRODUCTION .......................................................................................................... 1 2. A REVIEW OF LITERATURE ..................................................................................... 5 Major Issues of LVT and Selected Literature Review............................................ 5 Urban CGE Models That Deal with the Issues of LVT........................................ 23 3. THE BASIC MODEL................................................................................................... 31 An Outline of the Economy to Be Modeled ......................................................... 31 Formulation of the Basic Model ........................................................................... 50 Data....................................................................................................................... 57 4. EMPIRICAL RESULTS FOR THE BASIC MODEL ................................................. 71 5. EXTENSIONS TO THE BASIC MODEL................................................................. 100 The Model with Three Income Groups............................................................... 100 Immobile Housing Capital and Partially Mobile Housing Capital Adjustment . 120 6. WELFARE AND SENSITIVITY ANALYSES......................................................... 127 Welfare Analyses................................................................................................ 127 Sensitivity Analyses............................................................................................ 134 v 7. CONCLUSIONS......................................................................................................... 146 Summary of Findings.......................................................................................... 146 Future Research .................................................................................................. 152 APPENDICES ................................................................................................................ 154 VITA ............................................................................................................................... 182 vi LIST OF TABLES Table Page 1. Wage rate, tax rates, and some outcomes (DiMasi).................................................... 25 2. Comparisons between base case and optimal case (DiMasi)...................................... 26 3. Comparisons of model specifications among studies ................................................. 30 4. Parameters for the basic model................................................................................... 51 5. Variables for the basic model ..................................................................................... 51 6. Household and land area distribution of Atlanta region ............................................. 59 7. Land use type of the Atlanta region (10 counties)...................................................... 59 8. Annual average expenditure for the Atlanta MSA ..................................................... 60 9 Annual average household income and expenditure for the Atlanta region (10 counties) (estimated)................................................................................................. 61 10. National surveys: American time use ....................................................................... 62 11. Average lot size and land value for Atlanta metro (10 counties) .............................. 64 12. Transportation costs in America ................................................................................ 66 13. Rectangular SAM for the base model (per year) ....................................................... 68 14. Calibrated values for some parameters...................................................................... 70 15. Benchmark result: ‘tax on land = 22.9%, tax on capital = 22.9%’........................... 73 16. Results for ‘tax on land = 409%, tax on capital = 0%’ (fixed CBD and urban area) under the equal
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