A Tax Reform Approach to Commodity Taxation with Families

Robin Boadway and Katherine Cuff

FinanzArchiv: Public Finance Analysis, 2024, vol. 80, issue 1, 3-38

Abstract: We show that the optimality of uniform commodity taxation applies in a family setting when individuals live in two-adult families and take some decisions collectively. Allowing for household decisions to include intra-family redistribution, family production and public goods, uniform commodity taxation Pareto dominates differential commodity tax-ation when preferences are weakly separable and quasi-homothetic in goods and individual income taxation is linear progressive (Deaton, 1979; Hellwig, 2009), unless family welfare exhibits transferable utility (Chiappori and Gugl, 2020). We extend these results to general weakly separable preferences (Laroque, 2005; Kaplow, 2006), family income taxation and different timing of household decisions.

Keywords: family taxation; commodity taxation; income tax; tax reform (search for similar items in EconPapers)
JEL-codes: H21 H24 H31 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1628/fa-2023-0016

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