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Time-saving Goods, Time Inequalities, and Optimal Taxation

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  • Cristian F. Sepulveda

    (Farmingdale State College, SUNY, USA)

Abstract

Time-saving goods are defined as market goods that reduce home labor requirements (e.g. restaurants; washing machines). Assuming that time savings are costly, this paper shows that lower-income individuals can purchase fewer time savings and enjoy less leisure time. Commodity tax rates affecting low-income individuals should depend more on time savings, and less on the classic Corlett and Hague rule. The related literature suggests to impose lower tax rates on goods that require less home labor. This paper shows that goods that offer greater time savings with respect to their more affordable substitutes should also receive favorable tax treatment.

Suggested Citation

  • Cristian F. Sepulveda, 2019. "Time-saving Goods, Time Inequalities, and Optimal Taxation," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1902, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper1902
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    File URL: https://icepp.gsu.edu/files/2019/04/paper1902.pdf
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    References listed on IDEAS

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    1. W. J. Corlett & D. C. Hague, 1953. "Complementarity and the Excess Burden of Taxation," Review of Economic Studies, Oxford University Press, vol. 21(1), pages 21-30.
    2. Rania Antonopoulos & Thomas Masterson & Ajit Zacharias, 2012. "It's About 'Time': Why Time Deficits Matter for Poverty," Economics Public Policy Brief Archive ppb_126, Levy Economics Institute.
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    12. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
    13. Firouz Gahvari, 2007. "On Optimal Commodity Taxes When Consumption Is Time Consuming," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(1), pages 1-27, February.
    14. Clair Vickery, 1977. "The Time-Poor: A New Look at Poverty," Journal of Human Resources, University of Wisconsin Press, vol. 12(1), pages 27-48.
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