Efficiency Effects of Tax Deductions for Work-Related Expenses

In this paper it is shown that allowing the deduction of work-related expenses has a strictly\npositive effect on tax efficiency only if two conditions hold jointly: (i) The expenses should\nbe interpretable as real cost and (ii) the expenses should be required for increasing taxable\nincome. Otherwise deductions are inefficient, neutral or ambiguous. Thus it is argued that the\ncost of commuting to work should not be deductible as commuting does not increase taxable\nincome. The efficiency enhancing effect of deducting other expenses like educational ones or\nexpenses for housework and child care is challenged on the grounds that these expenses are\nlargely pecuniary costs.