Taxes, Tuition Fees and Education for Pleasure

Nikolaj Malchow-Møller, Søren Bo Nielsen, Jan Rose Skaksen

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Abstrakt

The fact that education provides both a productive and a consumptive (nonproductive) return has important and, in some cases, dramatic implications for optimal taxes and tuition fees. Using a simple model, we show that when the consumption share in education is endogenous and tuition fees are unconstrained, the optimal tax/fee system involves regressive income taxes and high tuition fees. A progressive labor income tax system may, on the other hand, be a second‐best response to politically constrained, low tuition fees. Finally, the existence of individuals with different abilities will also move the optimal income tax system toward progressivity.
OriginalsprogEngelsk
TidsskriftJournal of Public Economic Theory
Vol/bind13
Udgave nummer2
Sider (fra-til)189-215
Antal sider27
ISSN1097-3923
DOI
StatusUdgivet - apr. 2011

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