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Taxing Children: The Re-distributive Role of Child Benefits - Revisited

Author

Listed:
  • Tomer Blumkin
  • Yoram Margalioth
  • Efraim Sadka

Abstract

In this paper, we challenge the conventional wisdom that due to the negative correlation between family size and earning ability, family size can be used as a 'tagging' device, and calls for subsidizing children (via child allowances) to enhance egalitarian objectives. We show that the case for subsidizing children crucially hinges on child allowances being provided on a universal basis. Notably, when child benefits are means-tested, taxing children at the margin (namely, setting the total benefits to decline with the number of children) is socially optimal.

Suggested Citation

  • Tomer Blumkin & Yoram Margalioth & Efraim Sadka, 2010. "Taxing Children: The Re-distributive Role of Child Benefits - Revisited," CESifo Working Paper Series 2970, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2970
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    References listed on IDEAS

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    More about this item

    Keywords

    child allowance; re-distribution; means-testing; universal; tagging; optimal taxation;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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