Taxing Children: The Re-distributive Role of Child Benefits - Revisited

Tomer Blumkin, Yoram Margalioth and Efraim Sadka

No 275758, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: In this paper, we challenge the conventional wisdom that due to the negative correlation between family size and earning ability, family size can be used as a 'tagging' device, so that subsidizing children (via child allowances) enhances egalitarian objectives. We show that the case for subsidizing children crucially hinges on child allowances being provided on a universal basis. Notably, when child benefits are means-tested, taxing children at the margin (namely, setting total child benefits to decline with the number of children) is optimal under a broad class of egalitarian objectives.

Keywords: Consumer/Household Economics; Financial Economics (search for similar items in EconPapers)
Pages: 53
Date: 2010-11
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275758

DOI: 10.22004/ag.econ.275758

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