TY - JOUR
T1 - Optimal taxation with household production
AU - Kleven, Henrik Jacobsen
AU - Richter, Wolfram F.
AU - Sørensen, Peter Birch
N1 - JEL Classification: D13, H21
PY - 2000
Y1 - 2000
N2 - 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
AB - 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
U2 - 10.1093/oep/52.3.584
DO - 10.1093/oep/52.3.584
M3 - Journal article
SN - 0030-7653
VL - 52
SP - 584
EP - 594
JO - Oxford Economic Papers
JF - Oxford Economic Papers
IS - 3
ER -