The Effect of Income Taxation on Labor Supply when Deductions Are Endogenous.
This paper extends the standard static model of labor supply and taxation to the case where people are able to legally avoid taxes through the use of itemized deductions. Tax deductible expenditures are treated as a Hicksian composite good with a price (for those who decide to itemize) proportional to one minus the marginal tax rate. Estimation of the commonly used linear labor supply model (extended to incorporate the additional composite good) on a cross-section of prime aged married men suggests that tax deductible consumption is an uncompensated substitute for leisure (and complement with labor). The impact of taxes through the relative price of deductible expenditures appears to be much stronger than through the net wage. Copyright 1992 by MIT Press.
Year of publication: |
1992
|
---|---|
Authors: | Triest, Robert K |
Published in: |
The Review of Economics and Statistics. - MIT Press. - Vol. 74.1992, 1, p. 91-99
|
Publisher: |
MIT Press |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
A TIPS Scorecard: Are They Accomplishing Their Objectives?
Barnes, Michelle L, (2010)
-
Job Reallocation And The Business Cycle: New Facts An Old Debate
Schuh, Scott, (1998)
-
The Relationship between the Marginal Cost of Public Funds and Marginal Excess Burden.
Triest, Robert K, (1990)
- More ...