Taxing Leisure Complements

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Taxing Leisure Complements

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Title: Taxing Leisure Complements
Author: Kaplow, Louis
Citation: Kaplow, Louis. "Taxing leisure complements." Economic Inquiry 48, no. 4 (2010): 1065-1071.
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Abstract: Ever since Corlett and Hague, it has been understood that it tends to be optimal on second-best grounds to (relatively) tax complements to leisure and subsidize substitutes because doing so helps to offset the distorting effect of taxation on labor supply. Yet, Atkinson and Stiglitz’s optimal income/commodity tax analysis claims to demonstrate the opposite, and derivations in leading texts on optimal taxation offer opposing conclusions regarding the sign of optimal deviation of commodity taxes from uniformity. It is demonstrated that the optimality of relatively taxing leisure complements is indeed correct, and conflicting results are explained.
Published Version: http://dx.doi.org/10.1111/j.1465-7295.2009.00230.x
Other Sources: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1304721
http://www.law.harvard.edu/programs/olin_center/papers/pdf/Kaplow_621.pdf
http://www.nber.org/papers/w14397
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:11222733
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