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

Tomer Blumkin, Yoram Margalioth and Efraim Sadka

No 2970, CESifo Working Paper Series from CESifo

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, and calls for subsidizing children (via child allowances) to enhance 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 the total benefits to decline with the number of children) is socially optimal.

Keywords: child allowance; re-distribution; means-testing; universal; tagging; optimal taxation (search for similar items in EconPapers)
JEL-codes: D60 H20 H50 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2970

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