Working Paper
A Case for Taxing Education
Tomer Blumkin, Efraim Sadka
CESifo, Munich, 2005
CESifo Working Paper No. 1440
CESifo, Munich, 2005
CESifo Working Paper No. 1440
We illustrate a novel informational feature of education, which the government may utilize. Discretionary decisions of individuals to acquire education may serve as an additional signal (to earned labor income) on the underlying unobserved innate earning ability, thereby mitigating the informational constraint faced by the government. We establish a case for taxing education, as a supplement to the labor income tax.
CESifo Category
Public Finance
Public Finance
Keywords: optimal taxation, re-distribution, education, inequality
JEL Classification: D600,H200