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Income taxation of couples and the tax unit choice

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  • CREMER, Helmuth
  • LOZACHMEUR, Jean-Marie
  • PESTIEAU, Pierre

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

Abstract

This paper studies the optimal non linear income tax of couples. We build a general unitary model of labor supply and allow multidimensional heterogeneity in a discrete type framework. We concentrate our analysis on the resulting intra-family labor allocation of labor supplies and show that this analysis is strongly related to the choice of the tax unit (individual versus joint taxation). We give a necessary condition to have fully joint taxation in this framework and discuss some examples.

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File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2007_13.pdf
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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2007013.

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Date of creation: 01 Feb 2007
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Handle: RePEc:cor:louvco:2007013

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References

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  1. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  2. Brito, Dagobert L, et al, 1990. "Pareto Efficient Tax Structures," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 61-77, January.
  3. Cigno, Alessandro & Pettini, Anna, 2002. "Taxing family size and subsidizing child-specific commodities?," Journal of Public Economics, Elsevier, vol. 84(1), pages 75-90, April.
  4. Chiappori, Pierre-André & Fortin, Bernard & Lacroix, Guy, 1998. "Household Labor Supply, Sharing Rule and the Marriage Market," Cahiers de recherche 9810, Université Laval - Département d'économique.
  5. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  6. Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics 3411, University of Munich, Department of Economics.
  7. Kimmel, Jean & Kniesner, Thomas J., 1998. "New evidence on labor supply:: Employment versus hours elasticities by sex and marital status," Journal of Monetary Economics, Elsevier, vol. 42(2), pages 289-301, July.
  8. Blundell, Richard & Meghir, Costas & Neves, Pedro, 1993. "Labour supply and intertemporal substitution," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 137-160, September.
  9. Boskin, Michael J. & Sheshinski, Eytan, 1983. "Optimal tax treatment of the family: Married couples," Journal of Public Economics, Elsevier, vol. 20(3), pages 281-297, April.
  10. Schroyen, Fred, 2003. "Redistributive taxation and the household: the case of individual filings," Journal of Public Economics, Elsevier, vol. 87(11), pages 2527-2547, October.
  11. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-85, December.
  12. Kleven, Henrik Jacobsen, 2004. "Optimum taxation and the allocation of time," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 545-557, March.
  13. Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2009. "The Optimal Income Taxation of Couples," Econometrica, Econometric Society, vol. 77(2), pages 537-560, 03.
  14. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
  15. Craig Brett, 2007. "Optimal nonlinear taxes for families," International Tax and Public Finance, Springer, vol. 14(3), pages 225-261, June.
  16. Dagobert L. Brito & Jonathan H. Hamilton & Steven M. Slutsky & Joseph E. Stiglitz, 1991. "Pareto Efficient Tax Structures," NBER Working Papers 3288, National Bureau of Economic Research, Inc.
  17. Patricia F. Apps & Ray Rees, 1999. "Individual versus Joint Taxation in Models with Household Production," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 393-403, April.
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Cited by:
  1. Immervoll, Herwig & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup & Verdelin, Nicolaj, 2009. "An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries," IZA Discussion Papers 3965, Institute for the Study of Labor (IZA).
  2. Tomer Blumkin & Yoram Margalioth & Efraim Sadka, 2010. "Taxing Children: The Re-distributive Role of Child Benefits - Revisited," CESifo Working Paper Series 2970, CESifo Group Munich.
  3. Apps, Patricia & Rees, Ray, 2012. "Optimal Taxation, Child Care and Models of the Household," IZA Discussion Papers 6823, Institute for the Study of Labor (IZA).
  4. Marie-Louise Leroux & Grégory Ponthière, 2013. "Optimal prevention when coexistence matters," Journal of Population Economics, Springer, vol. 26(3), pages 1095-1127, July.
  5. Immervoll, Herwig & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup & Verdelin, Nicolaj, 2011. "Optimal tax and transfer programs for couples with extensive labor supply responses," Journal of Public Economics, Elsevier, vol. 95(11), pages 1485-1500.
  6. Normann Lorenz & Dominik Sachs, 2012. "Optimal Participation Taxes and Efficient Transfer Phase-Out," Working Paper Series of the Department of Economics, University of Konstanz 2012-37, Department of Economics, University of Konstanz.
  7. Aronsson, Thomas & Granlund, David, 2013. "Gender Norms, Work Hours, and Corrective Taxation," HUI Working Papers 83, HUI Research.
  8. Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2007. "The Optimal Income Taxation of Couples as a Multi-Dimensional Screening Problem," CESifo Working Paper Series 2092, CESifo Group Munich.
  9. repec:hal:wpaper:halshs-00575059 is not listed on IDEAS
  10. Ooghe, Erwin & Peichl, Andreas, 2014. "Fair and efficent taxation under partial control," ZEW Discussion Papers 14-002, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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