Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/189348
Authors: 
Boadway, Robin
Gahvari, Firouz
Year of Publication: 
2006
Series/Report no.: 
Queen's Economics Department Working Paper No. 1068
Abstract: 
This paper studies the optimal commodity taxation problem when time taken in consumption is a perfect substitute for either labor or leisure. It shows that while labor substitutability affects the optimal tax structure, leisure substitutability leaves the classical optimal tax results intact. In the Ramsey tax framework with linear income taxes, whether the consumers have the same or different earning abilities, labor substitutes tend to be taxed at a higher rate than leisure substitutes with the tax differential being increasing in consumption time. This is not necessarily the case when one allows for nonlinear income taxation.
Subjects: 
consumption time
labor substitutes
leisure substitutes
optimal taxation
JEL: 
H21
D13
J22
Document Type: 
Working Paper

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