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Efficiency effects of tax deductions for work-related expenses

Wolfram Richter ()

International Tax and Public Finance, 2006, vol. 13, issue 6, 685-699

Abstract: This paper studies the efficiency effects of granting deductions for work-related expenses. It is shown that much depends on whether the expenses are required for increasing taxable income and on whether the expenses are social costs. Among the noteworthy results are the following. Expenses for commuting should be taxed rather than granted deduction, as the increasing effect of commuting on taxable income is doubtful. Deductions for private costs such as expenses for housework and child care may turn out to be allocationally neutral. If they are not neutral, however, the efficient degree of deduction depends on relative labor supply elasticities. Copyright Springer Science + Business Media, LLC 2006

Keywords: Income tax deductions; Commuting; Housework; Child care; Educational expenses; Efficient taxation; Production efficiency (search for similar items in EconPapers)
Date: 2006
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Working Paper: Efficiency Effects of Tax Deductions for Work-Related Expenses (2004) Downloads
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