Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/207259
Authors: 
Köhne, Sebastian
Sachs, Dominik
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7868
Abstract: 
We analyze Pareto-efficient tax deduction rules for work-related expenses. Pareto efficiency dictates a strict rule for marginal deductions along the income distribution. An immediate implication is a recipe for designing Pareto-improving reforms. We apply our theory and simulate a Pareto-improving reform that introduces deductions for non-care household services (housekeeping, gardening, laundry) in the United States. The reform combines marginal deduction rates for household services between 55% and 85% with a slight increase in marginal tax rates.
Subjects: 
optimal taxation
tax deduction
Pareto-improving tax reform
JEL: 
D82
H21
Document Type: 
Working Paper

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