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Time-saving goods, time inequalities and optimal commodity taxation

Author

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  • Cristian F. Sepulveda

    (State University of New York)

Abstract

Time-saving goods are defined as market goods that reduce home labor requirements (e.g., restaurants; washing machines). Assuming that time savings are costly, this paper shows that lower income individuals can purchase fewer time savings and enjoy less leisure time. Commodity tax rates affecting low-income individuals should depend more on time savings, and less on the classic Corlett and Hague rule. The related literature suggests to impose lower tax rates on goods that require less home labor. This paper shows that goods that offer greater time savings with respect to their more affordable substitutes should also receive favorable tax treatment.

Suggested Citation

  • Cristian F. Sepulveda, 2022. "Time-saving goods, time inequalities and optimal commodity taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(1), pages 84-109, February.
    • Handle: RePEc:kap:itaxpf:v:29:y:2022:i:1:d:10.1007_s10797-020-09652-z
    DOI: 10.1007/s10797-020-09652-z
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    Cited by:

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    2. Peña, Guillermo, 2021. "Leisure as a complement of banking: Taxing financial services for reducing leisure time?," MPRA Paper 109942, University Library of Munich, Germany.

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    More about this item

    Keywords

    Time-saving goods; Optimal taxation; Home labor; Home production; Time allocation;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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