Optimal Commodity Taxation and Redistribution within Households
Institute for the Study of Labor (IZA); University College Dublin (UCD)
University of Cergy-Pontoise - THEMA; Institute for the Study of Labor (IZA); Centre Interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)
IZA Discussion Paper No. 5608
Using a collective model of consumption, we characterize optimal commodity taxes aimed at targeting specific individuals within the household. The main message is that distortionary indirect taxation can circumvent the agency problem of the household. Essentially, taxation should discourage less the consumption of a certain group of goods: those for which the slope of the Engel curves is larger for the targeted person.
Number of Pages in PDF File: 21
Keywords: optimal commodity taxation, targeting, intrahousehold distribution
JEL Classification: D13, D31, D63, H21, H31working papers series
Date posted: April 11, 2011
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