Optimal Taxation with Household Production
This paper suggests that the optimal tax system should favour market-produced services which are close substitutes for home-produced services. First, we modify the classical Corlett-Hague rule for optimal commodity taxation by showing that it may be optimal to impose a relatively low tax rate on consumer services even if such services are complements to leisure. Second, we find that when services and other goods are equally substitutable for leisure, so that uniform commodity taxation would be optimal in the absence of home production, the optimal tax structure will certainly involve a relatively low tax rate on consumer services.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sandmo, Agnar, 1974. "A Note on the Structure of Optimal Taxation," American Economic Review, American Economic Association, vol. 64(4), pages 701-06, September.
- Sadka, Efraim, 1977. "A theorem on uniform taxation," Journal of Public Economics, Elsevier, vol. 7(3), pages 387-391, June.
- Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January.
- Niels Fredriksen & Peter Hansen & Henrik Jacobsen & Peter Sørensen, 1995. "Subsidising consumer services: effects on employment, welfare and the informal economy," Fiscal Studies, Institute for Fiscal Studies, vol. 16(2), pages 71-93, May.
When requesting a correction, please mention this item's handle: RePEc:kud:epruwp:99-12. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann)
If references are entirely missing, you can add them using this form.