Optimal Taxation of Married Couples with Household Production
AbstractThe literature suggests that the concern for economic efficiency calls for individual-based taxation of married couples with a higher rate on the primary earner. This paper reconsiders the choice of tax unit in the Becker model of household production. Our aim is to study the robustness of previous results to the modelling of time allocation. In addition, we analyze the interaction between the optimal income tax for couples and the chosen commodity tax structure. In the absence of restrictions on the use of commodity taxes, efficient taxation requires joint taxation of the family. In the presence of restricted commodity taxation, the income tax should compensate for the erroneous commodity taxes. In this case, individual taxation is typically optimal, but not necessarily with a higher rate on primary earners as usually suggested.
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Bibliographic InfoPaper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 04-10.
Length: 21 pages
Date of creation: Aug 2004
Date of revision:
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Other versions of this item:
- Henrik Jacobsen Kleven & Claus Thustrup Kreiner, 2007. "Optimal Taxation of Married Couples with Household Production," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(4), pages 498-518, December.
- 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-2004-08-31 (All new papers)
- NEP-PBE-2004-08-31 (Public Economics)
- NEP-PUB-2004-08-31 (Public Finance)
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- Meier, Volker & Rainer, Helmut, 2013.
"Beyond Ramsey: Gender-Based Taxation with Non-Cooperative Couples,"
Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order
79877, Verein für Socialpolitik / German Economic Association.
- Volker Meier & Helmut Rainer, 2012. "Beyond Ramsey: Gender-Based Taxation with Non-Cooperative Couples," CESifo Working Paper Series 3966, CESifo Group Munich.
- Volker Meier & Matthias Wrede, 2008.
"Reducing the Excess Burden of Subsidizing the Stork: Joint Taxation, Individual Taxation, and Family Tax Splitting,"
CESifo Working Paper Series
2470, CESifo Group Munich.
- Volker Meier & Matthias Wrede, 2013. "Reducing the excess burden of subsidizing the stork: joint taxation, individual taxation, and family tax splitting," Journal of Population Economics, Springer, vol. 26(3), pages 1195-1207, July.
- 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.
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