Optimal Commodity Taxation and Redistribution within Households

21 Pages Posted: 11 Apr 2011

See all articles by Olivier Bargain

Olivier Bargain

IZA Institute of Labor Economics; University College Dublin (UCD)

Olivier Donni

University of Cergy-Pontoise - THEMA; IZA Institute of Labor Economics; Centre Interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)

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Abstract

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.

Keywords: optimal commodity taxation, targeting, intrahousehold distribution

JEL Classification: D13, D31, D63, H21, H31

Suggested Citation

Bargain, Olivier and Donni, Olivier, Optimal Commodity Taxation and Redistribution within Households. IZA Discussion Paper No. 5608, Available at SSRN: https://ssrn.com/abstract=1806409

Olivier Bargain (Contact Author)

IZA Institute of Labor Economics ( email )

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University College Dublin (UCD) ( email )

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HOME PAGE: http://www.ucd.ie/economics/staff/obargain/obargain.htm

Olivier Donni

University of Cergy-Pontoise - THEMA ( email )

33 boulevard du port
F-95011 Cergy-Pontoise Cedex, 95011
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre Interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE) ( email )

Pavillon De Sève
Ste-Foy, Quebec G1K 7P4
Canada

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