Tax Deductibility of Commuting Expenses and Leisures: On the Tax Treatment of Time-Saving Expenditure
AbstractAssuming that higher traveling expenses reduce traveling time, this paper considers tax deductibility of commuting expenses when a distorting wage tax is levied. While the decision on commuting expenses would not be distorted if traveling costs were completely deductible, taxation would still not be neutral with respect to the leisure-consumption choice. Moreover, the paper shows that second-best optimum taxation requires less than complete deductibility of commuting expenses. Since commuting expenses are simply a special case of time-saving expenditure, this paper develops optimum taxation rules concerning the taxation of time-saving expenditure.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 57 (2000)
Issue (Month): 2 (March)
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Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
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- Hirte, Georg & Tscharaktschiew, Stefan, 2013. "Income tax deduction of commuting expenses in an urban CGE study: The case of German cities," Transport Policy, Elsevier, vol. 28(C), pages 11-27.
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