Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/39005
Authors: 
Pirttilä, Jukka
Suoniemi, Ilpo
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper Public Finance 3000
Abstract: 
Atkinson and Stiglitz (Journal of Public Economics 1976) show that when the government has access to non-linear income taxation and consumer preferences are separable between consumption and leisure, there is no need for differentiated commodity taxation. This paper examines the empirical validity of this claim using consumption data from Finland. The data have extensive information on commodity demand, the use of public services and hours of work. When labour income is controlled for in a semi-parametric way, we find that capital income and housing expenses are negatively associated with hours of work, whereas the use of child care is somewhat positively correlated with labour supply. These results suggest that capital income and housing should be taxed whereas day care could perhaps be subsidised.
Subjects: 
commodity taxation
public provision of private goods
semi-parametric methods
JEL: 
C14
H21
H42
Document Type: 
Working Paper

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