چگونه خدمات مسکن مالک بر نابرابری درآمد و توزیع مجدد تاثیر می گذارد ؟

This paper aims at analyzing the redistributive impact that the inclusion of the imputed rental market value of owner-occupied housing would have if used for quantifying the ability to pay rather than imputation based on cadastral values. We consider the Spanish personal income tax as reference, due to the differential treatment that it provides for imputed income from owner-occupied housing, together with the exceptionally high percentages of home ownership in Spain. By means of micro-simulation we explore the consequences of alternative possibilities for dealing with implicit income from owner-occupied housing.

Both cash and non-cash income determine the economic well-being of households (Smeeding et al., 1993). Nevertheless, inclusion of non-monetary income in economic analyses or for government tax and transfer program purposes entails substantial measurement difficulties, which probably explains why incomes from services of consumer durables are often omitted in the studies on income distribution, in the production of consumer price indexes and in the calculation of macroeconomic indicators (Katz, 1983).1 The treatment of in-kind income in the definition of ability to pay for personal income tax purposes is a classic topic in Public Finance theory. The personal income tax programs of most countries tax income differently depending on the source,2 which is a violation of the classic principle of horizontal equity.3 A clear example of this difference is found in the differing intensities with which monetary and non-monetary income are taxed. Arguments about whether and how non-monetary income should be taxed are often raised in income tax reforms.4 Debate has focused especially on the tax treatment of non-monetary real estate income accruing to those living in homes they own. The differential treatment which the Spanish personal income tax (PIT) provides for this type of income, together with the exceptionally high incidence of primary residence ownership in Spain make it especially interesting to consider the consequences for Spain of alternative possible ways of treating the imputed income of owner occupiers derive from their homes. Real estate income receives specific treatment in the Spanish personal income tax (PIT) via the criteria for measuring taxable income, including income exemption criteria, and through different tax rates and tax credits.5 In the special case of owner-occupied housing, Act 18/1991 – which regulated the PIT from 1992 to 1998 – requires the imputation of an in-kind return on owner-occupied housing via the application of a stated rate to the cadastral value of a home.6 The debate on the limitations of this procedure for properly reflecting ability to pay is the main motivation for this paper.7 In particular, this paper analyzes the redistributive impact resulting from the inclusion in the taxable income of the imputed rental market value of owner-occupied housing based on cadastral values versus alternative valuation methods. The analysis makes use of the results of micro-simulations for three different scenarios. In the first scenario, the actual Spanish PIT regulations regarding owner-occupied housing are modelled whereas alternative methods of determining the taxes for non-monetary income enjoyed by those living in owned homes are used for the second and third simulation scenarios. More specifically, the second scenario includes a new imputation at market value, although this change is made maintaining the initial tax liability, whereas in the third scenario the tax liability is recalculated by adding the new returns at market value to the tax base. Using the simulation results for these three scenarios, the authors assess the extent to which the treatment of owner-occupied housing in the PIT affects measures of income inequality and changes overtime in income inequality. The period covered in this study is from 1992 to 1998, which are the years of the enforcement of Act 18/1991.8 The structure of the paper is as follows. Following this introduction, the second section considers the concept of personal ability to pay and taxable income, with special attention to non-monetary income. The third section introduces alternative means of income imputation for owner-occupied housing, while the fourth section includes the empirical analysis and a discussion of the results. Concluding remarks are presented in the final section.

As posed in the introduction, the treatment in personal income tax (PIT) programs of non-cash income resulting from the actual or potential use of dwellings by their owners is a controversial issue. On the one hand, it is not easy to determine how much income should be imputed according to market value. On the other hand, there are sociopolitical reasons, beyond the difficulty taxpayers may have in reporting this implicit income, that make it hard to take account of the contribution of this income to taxpayer ability to pay or its tax burden effects. Nevertheless, from a public finance perspective, there is substantial agreement about the increase in ability to pay due to the services provided by owner-occupied housing. Arguments like the opportunity cost incurred by the owners when not renting their houses –including the one that serves as primary residence – or the notional rent that owner occupiers pay to themselves can be utilized to develop a suitable measure of ability to pay that should include market value estimates for this kind of income, regardless of the tax treatment adopted by government. However, most empirical papers which analyze income inequality and its redistribution – including those focusing on progressivity and redistributive effects of personal income taxes – do not consider this approach when measuring income as an indicator of ability to pay. The increasing weight of housing expenditure in the budgets of households invite us to consider the relevance of income related to services provided by owner-occupied housing when studying income distribution issues including the changes induced by the personal income tax. Our results show that the measurement of income before tax including imputed market value incomes resulting from the actual or potential use of the services of owner-occupied housing significantly modifies our understanding of before tax income inequality. Scenarios 2 and 3 – in which an imputed income at market value was included – show a significant increase in income inequality before tax. This result undoubtedly affects any measurement of the redistributive effect and progressivity of the personal income tax. Even accepting the possibility that the increase in the amount of imputed incomes at market values has no consequences on tax liability – scenario 2 – there would be changes in net income inequality and, as a consequence, in the redistributive capacity of the income tax. In this case, the redistributive effects of the PIT are somewhat lower than those estimated for the standard case (scenario 1) which involves imputing income for non-rented housing using cadastral values. Nevertheless, the effects on the PIT progressivity are not so visible. The strong reduction obtained when comparing scenario 1 with scenario 2 is caused, to a great extent, by re-ranking due to the higher income resulting from the inclusion of market value incomes for those taxpayers with non-rented houses. Therefore, the possibility of increased taxation of these non-cash incomes could be an option for significantly increasing the redistributive capacity of the income tax, while still achieving the growth of total revenues that had resulted previously from a reduction in progressivity. Consequently, our results confirm the idea that the measurement of income inequality, and also of the progressivity and redistributive effects of personal income taxes, requires a definition of income before tax that is closer to the concept of economic income, especially with respect to imputed income for the services of owner-occupied housing. A tax policy recommendation that can be drawn from the results of our paper is related to the use of income taxes to boost the supply of rented housing. As has been observed, from the traditional principles of tax theory, the appropriate inclusion in the PIT tax base of imputed income for non-rented housing could be used as a mechanism to stimulate greater supply of rental housing. This alternative, motivated by an owner opportunity cost perspective seems superior both in terms of efficiency and feasibility to other proposals that, with dubious theoretical foundations and real life applicability, recommend the introduction of specific forms of taxation of a “non-occupied house”. In this sense, one of the future extensions of this research is to consider the design of these sorts of incentive mechanisms.