International Tax and Public Finance

, Volume 13, Issue 6, pp 685–699 | Cite as

Efficiency effects of tax deductions for work-related expenses

  • Wolfram F. RichterEmail author


This paper studies the efficiency effects of granting deductions for work-related expenses. It is shown that much depends on whether the expenses are required for increasing taxable income and on whether the expenses are social costs. Among the noteworthy results are the following. Expenses for commuting should be taxed rather than granted deduction, as the increasing effect of commuting on taxable income is doubtful. Deductions for private costs such as expenses for housework and child care may turn out to be allocationally neutral. If they are not neutral, however, the efficient degree of deduction depends on relative labor supply elasticities.


Income tax deductions Commuting Housework Child care Educational expenses Efficient taxation Production efficiency 


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© Springer Science + Business Media, LLC 2006

Authors and Affiliations

  1. 1.Department of Economics, CESifoUniversity of DortmundMunich, and IZA, Bonn

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