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Heterogeneity in Income Tax Capitalization: Evidence from the Swiss Housing Market

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There is evidence that taxes capitalize into housing prices, but great uncertainty about the magnitude of income tax capitalization. One explanation why empirical evidence is unclear may stem from the fact that capitalization is something personal, depending on income, mobility, and on the individual tax burden of the bidding households. Therefore, income tax capitalization may theoretically differ substantially between different housing price segments. Results obtained from the analysis of a large Swiss dataset suggest that capitalization is lower for apartments for rent compared to apartments for sale. Capitalization is insignificant or less than 100% for all rental segments. Concerning apartments for sale, capitalization is well above 100% for the low and top price segments.


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Author information

Correspondence to Mario Morger.

Additional information

This study was realized during my employment at Swiss Federal Tax Administration. I am grateful to the Cantonal Bank of Zurich, and especially to Marco Salvi (now Avenir Suisse) and Peter Meier, for providing the dataset. I am also indebted to Thomas Brändle, Martin Daepp, Bruno Jeitziner, Alowin Moes, Rudi Peters, Raphaël Parchet, Christoph Schaltegger, Peter Schwarz, David Stadelmann, Philippe Thalmann, Volker Grossmann, two anonymous referees, and the participants of the 2013 meeting of the Swiss Society of Economics and Statistics (SSES) in Neuchatel for helpful discussions and comments.

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Morger, M. Heterogeneity in Income Tax Capitalization: Evidence from the Swiss Housing Market. Swiss J Economics Statistics 153, 227–259 (2017).

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  • H22
  • H73
  • R21
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  • housing prices
  • income tax capitalization
  • segregation