Optimal Taxation With Consumption Time As A Leisure Or Labor Substitute

Robin Boadway and Firouz Gahvari

No 1068, Working Paper from Economics Department, Queen's University

Abstract: This paper studies the optimal commodity taxation problem when time taken in consumption is a perfect substitute for either labor or leisure. It shows that while labor substitutability affects the optimal tax structure, leisure substitutability leaves the classical optimal tax results intact. In the Ramsey tax framework with linear income taxes, whether the consumers have the same or different earning abilities, labor substitutes tend to be taxed at a higher rate than leisure substitutes with the tax differential being increasing in consumption time. This is not necessarily the case when one allows for nonlinear income taxation.

Keywords: consumption time; labor substitutes; leisure substitutes; optimal taxation (search for similar items in EconPapers)
JEL-codes: D13 H21 J22 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-01
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1068.pdf First version 2006 (application/pdf)

Related works:
Journal Article: Optimal taxation with consumption time as a leisure or labor substitute (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1068

Access Statistics for this paper

More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock (babcockm@queensu.ca).