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Income tax deduction of commuting expenses in an urban CGE study: The case of German cities

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  • Hirte, Georg
  • Tscharaktschiew, Stefan

Abstract

Granting the right to deduct commuting expenses from the income tax base has regularly been under debate during the last decades. This paper provides for the first time an insight into the magnitude of the effects of this kind of commuting subsidy under different funding schemes. The economic and spatial effects are calculated by applying a spatial CGE approach calibrated to a German urban area. The findings suggest that effects on urban sprawl characterized by suburbanization, spatial expansion of the city, and increasing commuting distance are surprisingly small. Concerning welfare, we found that the current level of tax deductions in Germany is too small in the case of income tax funding. If one considers further changes in the tax system welfare can be considerably enhanced by raising tax deductions above that level. In particular this refers to a tax structure where energy taxes are used to make traveling by car less attractive and tax deductions are used to lower the negative impact of taxes on labor supply.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:trapol:v:28:y:2013:i:c:p:11-27
    DOI: 10.1016/j.tranpol.2012.05.003
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    Cited by:

    1. Fetene, Gebeyehu M. & Hirte, Georg & Kaplan, Sigal & Prato, Carlo G. & Tscharaktschiew, Stefan, 2016. "The economics of workplace charging," Transportation Research Part B: Methodological, Elsevier, vol. 88(C), pages 93-118.
    2. Tscharaktschiew, Stefan, 2016. "The private (unnoticed) welfare cost of highway speeding behavior from time saving misperceptions," Economics of Transportation, Elsevier, vol. 7, pages 24-37.
    3. Nitzsche, Eric & Tscharaktschiew, Stefan, 2013. "Efficiency of speed limits in cities: A spatial computable general equilibrium assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 56(C), pages 23-48.
    4. Chaloupka, Christine & Kölbl, Robert & Loibl, Wolfgang & Molitor, Romain & Nentwich, Michael & Peer, Stefanie & Risser, Ralf & Sammer, Gerd & Schützhofer, Bettina & Seibt, Claus, 2015. "Nachhaltige Mobilität aus sozioökonomischer Perspektive – Diskussionspapier der Arbeitsgruppe "Sozioökonomische Aspekte" der ÖAW-Kommission "Nachhaltige Mobilität" (ITA-manu," ITA manu:scripts 15_02, Institute of Technology Assessment (ITA).
    5. Tscharaktschiew, Stefan, 2014. "Shedding light on the appropriateness of the (high) gasoline tax level in Germany," Economics of Transportation, Elsevier, vol. 3(3), pages 189-210.
    6. Georg Hirte & Stefan Tscharaktschiew, 2015. "Why not to choose the most convenient labor supply model? The impact of labor supply modeling on policy evaluation," ERSA conference papers ersa15p303, European Regional Science Association.

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