Date: June 17, 1996
Creator: Gravelle, Jane G
Description: Studies have estimated that some of these revisions would cause a decline in demand for houses and significant reduction in house prices--perhaps in excess of 15 percent. These studies, however, presumed a fixed supply of housing; even a limited supply response would greatly decrease predicted asset price effects. Supply response is likely to be large in the long run and not insignificant in the short run. Effects on housing demand might also be mitigated by increases in savings rates and lower interest rates. Thus, effects of the flat tax on housing prices are likely to be limited in the short run and very small in the long run. Rental housing demand, on the other hand, would be encouraged with a shift to a consumption tax base.
Contributing Partner: UNT Libraries Government Documents Department