The Behavioral Response to Housing Transfer Taxes: Evidence from a Notched Change in D.C. Policy

65 Pages Posted: 29 Apr 2016

See all articles by Joel B. Slemrod

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

Caroline Weber

University of Oregon - Department of Economics

Hui Shan

Board of Governors of the Federal Reserve System

Date Written: April 2016

Abstract

This paper estimates the behavioral response to residential real estate transfer taxes by studying notched tax rate changes in Washington D.C., exploiting both a price and time notch as identifying variation. We provide evidence that there is manipulation of the sales price to the lower-tax-rate region around the price notch, and use this manipulation to show that there was significant awareness of the tax changes and the incentives they created. We find some less compelling evidence of a change in the timing of house sales to beat the tax increase. Finally, we construct difference-in-difference estimates to examine whether there is a lock-in effect in the volume of house sales away from the price and time notches; we find no evidence of a lock-in effect in this setting.

Keywords: housing transfer taxes, lock-in, tax notches

JEL Classification: H2, H31, H71

Suggested Citation

Slemrod, Joel B. and Weber, Caroline and Shan, Hui, The Behavioral Response to Housing Transfer Taxes: Evidence from a Notched Change in D.C. Policy (April 2016). Available at SSRN: https://ssrn.com/abstract=2771229 or http://dx.doi.org/10.2139/ssrn.2771229

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Room R5396
Ann Arbor, MI 48109-1234
United States
734-936-3914 (Phone)
734-763-4032 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Caroline Weber (Contact Author)

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

Hui Shan

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
(202) 452 3491 (Phone)
(202) 728 5887 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
94
rank
271,134
Abstract Views
522
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information