A PROPERTY TAXATION MECHANISM WITH SELF-ASSESSMENT

Authors

  • Dieter Gstach

    Corresponding author
    1. Vienna University of Economics
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      Numerous discussions with Wolfgang Pesendorfer helped to shape the first version of this paper. Two anonymous referees contributed many helpful comments during the final preparation of this paper for print, leading to much improved readability. This help is gratefully acknowledged while the usual disclaimer applies.


Dieter Gstach
Department of Economics, VW6
Augasse 2-6
Vienna, Vienna
1090 Austria
E-mail: dieter.gstach@wu-wien.ac.at

ABSTRACT

This paper analyzes a variant of the classic idea for property taxation based on owner's self-assessment. To induce reporting of market values tax authorities announce to purchase some of the properties randomly at declared values under certain conditions. These conditions are based on properties of the distribution of declared values. It is proven that a unique Nash equilibrium of this taxation game among tax payers exists in which all of them report market values and tax authorities do not purchase any property.

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