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Tax Deductibility of Commuting Expenses and Residential Land Use with more than one Center

Matthias Wrede ()

No 972, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper analyzes the treatment of commuting expenses by the income tax code from a normative and a positive point of view within a continuous space framework with endogenous residence choices and perfect labor mobility. As commuting expenses should never be deductible from the income tax base in a first-best world, deductibility might well be the outcome of a second-best-optimum-tax approach provided that not all factors of production were mobile. Non-deductibility might be justified by a lack of instruments to internalize environmental and congestion externalities or by perfect mobility of all production factors. However, the existence of deductions in many coun-tries can be easily explained within a public choice framework by redistribution from non-commuters to commuters.

Keywords: Income tax; relief; residential land use; labor mobility; commuting expenses; optimum taxation (search for similar items in EconPapers)
JEL-codes: H21 J61 R13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-geo, nep-pbe and nep-ure
Date: 2003
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