Resource title

Optimal income taxation of married couples: an empirical analysis of joint and individual taxation

Resource image

image for OpenScout resource :: Optimal income taxation of married couples: an empirical analysis of joint and individual taxation

Resource description

In this paper we develop a discrete model of optimal taxation of married couples and empirically discuss the optimality of income taxation for this group. To this end, we derive the social welfare function which guarantees that joint taxation of married couples is optimal. We will contrast this welfare function with the one that makes a system of individual taxation optimal. For the empirical application we use a static structural labor supply model to estimate the preferences of households. We find that the system of joint taxation is only optimal when the government has a high taste for redistribution towards one-earner couples and a very low or even negative taste for redistribution towards couples in which both partners earn a similar amount of income. In contrast, the optimality of individual taxation is less dependent of the working composition within the household.

Resource author

Peter Haan, Dolores Navarro

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/27361

Resource license

Adapt according to the presented license agreement and reference the original author.