A PROPERTY TAXATION MECHANISM WITH SELF-ASSESSMENT

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. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.