The Taxation of Couples
AbstractThis paper is concerned with the question of how couples should be taxed. One reason for the importance of this issue is simply that the overwhelming majority of individuals live in households formed around couples, and so it could be argued that empirically, this is the single most important problem in personal income taxation. A second reason is that the economic theory of optimal taxation and tax reform, at least as it is presented in the mainstream literature, provides little guidance on this issue, resting as it does on models of the single person household. An old insight in the earlier public finance literature is that any discussion of the taxation of two-person households necessarily involves the recognition of the importance of household production. In this paper we try to show how a simple model of household production can be used to help the analysis of optimal taxation and tax reform, and to put the “conventional wisdom”, which says that it is optimal to tax women on a separate, lower tax schedule than men, on a firmer basis. What emerges clearly from the analysis is how centrally important the relationship between productivity in household production and female labour supply really is, and how little we know about it empirically.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 559.
Date of creation: Jul 2007
Date of revision:
Optimal taxation; household production; labour supply.;
Other versions of this item:
- Apps, Patricia & Rees, Ray, 2007. "The Taxation of Couples," IZA Discussion Papers 2910, Institute for the Study of Labor (IZA).
- Patricia Apps & Ray Rees, 2007. "The Taxation of Couples," Discussion Papers, Department of Economics, University of York 07/21, Department of Economics, University of York.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-14 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Piggott, John & Whalley, John, 1996.
"The Tax Unit and Household Production,"
Journal of Political Economy, University of Chicago Press,
University of Chicago Press, vol. 104(2), pages 398-418, April.
- Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics, University of Munich, Department of Economics 3411, University of Munich, Department of Economics.
- Apps,Patricia & Rees,Ray, 2009.
"Public Economics and the Household,"
Cambridge Books, Cambridge University Press,
Cambridge University Press, number 9780521887878.
- Michael J. Boskin & Eytan Sheshinski, 1979.
"Optimal Tax Treatment of the Family: Married Couples,"
NBER Working Papers
0368, National Bureau of Economic Research, Inc.
- Boskin, Michael J. & Sheshinski, Eytan, 1983. "Optimal tax treatment of the family: Married couples," Journal of Public Economics, Elsevier, Elsevier, vol. 20(3), pages 281-297, April.
- Martin Feldstein & Daniel Feenberg, 1995.
"The Taxation of Two Earner Families,"
NBER Working Papers
5155, National Bureau of Economic Research, Inc.
- Sheshinski, Eytan, 1972. "The Optimal Linear Income-Tax," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 39(3), pages 297-302, July.
- Apps, Patricia & Rees, Ray, 1999.
"On the taxation of trade within and between households,"
Journal of Public Economics, Elsevier,
Elsevier, vol. 73(2), pages 241-263, August.
- Apps, P.F. & Rees, R., 1998. "On the Taxation of Trade Within and Between Households," Papers, Australian National University - Department of Economics 337, Australian National University - Department of Economics.
- Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(114), pages 175-208, April.
- Myles,Gareth D., 1995. "Public Economics," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521497695.
- Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, Elsevier, vol. 35(3), pages 355-369, April.
- Apps, Patricia, 1982. "Institutional inequality and tax incidence," Journal of Public Economics, Elsevier, Elsevier, vol. 18(2), pages 217-242, July.
- Auerbach, Alan J. & Hines, James Jr., 2002.
"Taxation and economic efficiency,"
Handbook of Public Economics, Elsevier,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 21, pages 1347-1421
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.