Increasing the tax rate on land from 0.55% to 5.55%, balanced by reductions in taxes on capital and labor by 28% and 10%, respectively, would increase the welfare of a representative household by 3.4%, and increase output by 15%.
If the model is tweaked to include separate groups of workers, capitalists, and landlords, the output gain remains the same while welfare gains rise to 6.4%.
econometric