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Taxing Children: The Re-distributive Role of Child Benefits - Revisited

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  • Blumkin, Tomer
  • Margalioth, Yoram
  • Sadka, Efraim

Abstract

In this paper, we challenge the conventional wisdom that due to the negative correlation between family size and earning ability, family size can be used as a 'tagging' device, so that subsidizing children (via child allowances) enhances egalitarian objectives. We show that the case for subsidizing children crucially hinges on child allowances being provided on a universal basis. Notably, when child benefits are means-tested, taxing children at the margin (namely, setting total child benefits to decline with the number of children) is optimal under a broad class of egalitarian objectives.

Suggested Citation

  • Blumkin, Tomer & Margalioth, Yoram & Sadka, Efraim, 2010. "Taxing Children: The Re-distributive Role of Child Benefits - Revisited," Foerder Institute for Economic Research Working Papers 275758, Tel-Aviv University > Foerder Institute for Economic Research.
    • Handle: RePEc:ags:isfiwp:275758
    DOI: 10.22004/ag.econ.275758
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