Should commuting expenses be tax deductible? A welfare analysis

This paper asks whether or not commuting expenses should be tax deductible. In order to answer this question, a simple multiregion model of (im-)perfe ct household and worker mobility is employed. The paper shows that deductib ility is clearly inefficient only if households are perfectly mobile and if households cannot choose their place of work. If the region of work is not exogenously fixed, commuting expenses should be deductible at more than 10 0%. even if households choose simultaneously the place of work and the regi on of residence, and even if tax rates are nor standardized within the fede ration. (C) 2000 Academic Press.