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Title: Income Tax Treatment of Families with Children
Resulting in 1 citation.
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Mumford, Kevin J. |
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Income Tax Treatment of Families with Children Working Paper, Department of Economics, Purdue University, November 2008 Cohort(s): NLSY79 Publisher: Department of Economics, Purdue University Keyword(s): Benefits; Children; Family Formation; Family Models; Family Resources; Family Size; Family Studies; Fertility; Maternal Employment; Taxes; Time Use; Wives, Work Permission to reprint the abstract has not been received from the publisher. Families with children receive preferential treatment in the U.S. federal income tax. Over the past 15 years, the real value of child tax benefits approximately doubled reaching nearly $1,900 per child in 2006. This paper examines the efficiency cost of providing child tax benefits. A representative agent model is used to show how the efficiency cost of providing child tax benefits depends on labor supply and fertility elasticities. The model reveals that cross-price substitution effect for labor supply and children is of primary importance in calculating the efficiency cost. However, there are no estimates of this parameter in the literature. This paper uses data from the National Longitudinal Survey of Youth (NLSY) to estimate this parameter. The estimated cross-price substitution effect implies that children and time spent outside of employment are complements. This implies that the full cost of providing child tax benefits is larger than the reported tax expenditure. |
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Bibliography Citation
Mumford, Kevin J. "Income Tax Treatment of Families with Children." Working Paper, Department of Economics, Purdue University, November 2008. |