Tax Filing Choices for the Household under Separable Spheres Bargaining
AbstractIf household choices can be rationalized by the maximization of a well defined utilityfunction, allowing spouses to file individually or jointly is equivalent to offeringthe envelope of the two tax schedules. If, instead, household ’preferences’ are constantlybeing redefined through bargaining, the option to file separately may affectoutcomes even if it is never chosen. We use Lundberg and Pollak’s (1993) separatespheres bargaining model to assess the impact of filing options on the outcomes ofprimary and secondary earners. Threat points of the household’s bargain are givenfor each spouse by the utility that he or she attains as a follower of a counter-factualoff-equilibrium Stackelberg game played by the couple. For a benchmark tax systemwhich treats a couple’s average taxable income as if it were that of a single individual,we prove that if choices are not at kinks, allowing couples to choose whether to filejointly or individually usually benefits the secondary earner. In our numeric exercisesthis is also the case when choices are at kinks as well. These findings are, however,quite sensitive to the details of the tax system, as made evident by the examinationof an alternative tax system.
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 FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 733.
Date of creation: 18 Jun 2012
Date of revision:
Contact details of provider:
Postal: Praia de Botafogo 190, sala 1100, Rio de Janeiro/RJ - CEP: 22253-900
Web page: http://epge.fgv.br
More information through EDIRC
This paper has been announced in the following NEP Reports:
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.:
- Roger H. Gordon & Hal R. Varian, 1986.
"Taxation of Asset Income in the Presence of a World Securites Market,"
NBER Working Papers
1994, National Bureau of Economic Research, Inc.
- Gordon, Roger H. & Varian, Hal R., 1989. "Taxation of asset income in the presence of a world securities market," Journal of International Economics, Elsevier, vol. 26(3-4), pages 205-226, May.
- Alesina, Alberto & Ichino, Andrea & Karabarbounis, Loukas, 2007.
"Gender Based Taxation and the Division of Family Chores,"
IZA Discussion Papers
3233, Institute for the Study of Labor (IZA).
- Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2011. "Gender-Based Taxation and the Division of Family Chores," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 1-40, May.
- Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2007. "Gender Based Taxation and the Division of Family Chores," NBER Working Papers 13638, National Bureau of Economic Research, Inc.
- Alesina, Alberto F & Ichino, Andrea & Karabarbounis, Loukas, 2007. "Gender Based Taxation and the Division of Family Chores," CEPR Discussion Papers 6591, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Núcleo de Computação da EPGE).
If references are entirely missing, you can add them using this form.