A note on reliefs for traveling expenses to work

by Matthias Wrede

Assuming that higher traveling expenses reduce traveling time, this paper considers reliefs for traveling expenses to work when a distorting wage tax is levied. While the decision on traveling expenses would not be distorted if traveling costs were completely deductible, taxation would still not be neutral with respect to the leisure-consumption choice. Moreover, the paper shows that second-best optimum taxation requires less than complete deductibility of traveling expenses to work.

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Year of publication:	1999
Authors:	Wrede, Matthias
Publisher:	Bamberg : Univ., Bamberg Economic Research Group on Government and Growth
Subject:	income taxation \| reliefs \| traveling expenses to work \| optimum taxation \| Kosten \| Costs \| Steuervergünstigung \| Tax incentive \| Lohnsteuer \| Wage tax \| Optimale Besteuerung \| Optimal taxation \| Theorie \| Theory \| Pendelverkehr \| Commuting