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Efficiency effects of tax deductions for work-related expenses

  • Wolfram Richter


This paper studies the efficiency effects of granting deductions for work-related expenses. It is shown that much depends on whether the expenses are required for increasing taxable income and on whether the expenses are social costs. Among the noteworthy results are the following. Expenses for commuting should be taxed rather than granted deduction, as the increasing effect of commuting on taxable income is doubtful. Deductions for private costs such as expenses for housework and child care may turn out to be allocationally neutral. If they are not neutral, however, the efficient degree of deduction depends on relative labor supply elasticities. Copyright Springer Science + Business Media, LLC 2006

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Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 13 (2006)
Issue (Month): 6 (November)
Pages: 685-699

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Handle: RePEc:kap:itaxpf:v:13:y:2006:i:6:p:685-699
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  1. Homburg, Stefan, 2010. "Allgemeine Steuerlehre," EconStor Books, ZBW - German National Library of Economics, number 92547, April.
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  12. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Baldry, Jonathan, 1998. "Income Tax Deductions for Work-Related Expenses: The Rationale Examined," Australian Economic Papers, Wiley Blackwell, vol. 37(1), pages 45-57, March.
  14. Julie Hope & Paul Miller, 1988. "Financing Tertiary Education: An Examination of the Issues," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 21(4), pages 37-57.
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  16. Trostel, Philip A, 1993. "The Effect of Taxation on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 327-50, April.
  17. Judd, Kenneth L, 1998. "Taxes, Uncertainty, and Human Capital," American Economic Review, American Economic Association, vol. 88(2), pages 289-92, May.
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