This 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 .nance 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 .rmer 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.
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Paper provided by Department of Economics, University of York in its series Discussion Papers with number
07/21.
Length: Date of creation: Jul 2007 Date of revision: Handle: RePEc:yor:yorken:07/21
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Patricia Apps & Ray Rees, 2007.
"The Taxation of Couples,"
CEPR Discussion Papers
559, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University.
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References listed on IDEAS 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.:
Auerbach, Alan J. & Hines, James Jr., 2002.
"Taxation and economic efficiency,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 21, pages 1347-1421
Elsevier.
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Martin Feldstein & Daniel R. Feenberg, 1996.
"The Taxation of Two-Earner Families,"
NBER Chapters,
in: Empirical Foundations of Household Taxation, pages 39-75
National Bureau of Economic Research, Inc.
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