IDEAS home Printed from
   My bibliography  Save this article

Optimal nonlinear taxes for families


  • Craig Brett



The problem faced by a taxation authority choosing a tax schedule for families is modeled as a multi-dimensional screening problem. A description of the possible constrained Pareto-efficient mechanisms is given. The implications of a standard redistributive assumption on the sign of marginal tax rates is explored. In contrast to unidimensional taxation models, the redistributive assumption does not imply that marginal tax rates are everywhere non-negative. The qualitative features of optimal tax schedules are discussed. It is concluded that taxation based solely on total family income is rarely optimal. Copyright Springer Science + Business Media, LCC 2007

Suggested Citation

  • Craig Brett, 2007. "Optimal nonlinear taxes for families," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 225-261, June.
  • Handle: RePEc:kap:itaxpf:v:14:y:2007:i:3:p:225-261 DOI: 10.1007/s10797-006-9000-1

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Kanbur, Ravi & Keen, Michael & Tuomala, Matti, 1994. "Optimal non-linear income taxation for the alleviation of income-poverty," European Economic Review, Elsevier, vol. 38(8), pages 1613-1632, October.
    2. Matthews, Steven & Moore, John, 1987. "Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening," Econometrica, Econometric Society, vol. 55(2), pages 441-467, March.
    3. Brito, Dagobert L, et al, 1990. "Pareto Efficient Tax Structures," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 61-77, January.
    4. Seade, J. K., 1977. "On the shape of optimal tax schedules," Journal of Public Economics, Elsevier, vol. 7(2), pages 203-235, April.
    5. Dixit, Avinash & Seade, Jesus, 1979. "Utilitarian versus egalitarian redistributions," Economics Letters, Elsevier, vol. 4(2), pages 121-124.
    6. Weymark, John A, 1987. "Comparative Static Properties of Optimal Nonlinear Income Taxes," Econometrica, Econometric Society, vol. 55(5), pages 1165-1185, September.
    7. Roell, Ailsa A., 1985. "A note on the marginal tax rate in a finite economy," Journal of Public Economics, Elsevier, vol. 28(2), pages 267-272, November.
    8. Timothy Besley & Stephen Coate, 1995. "The Design of Income Maintenance Programmes," Review of Economic Studies, Oxford University Press, vol. 62(2), pages 187-221.
    9. Guesnerie, Roger & Seade, Jesus, 1982. "Nonlinear pricing in a finite economy," Journal of Public Economics, Elsevier, vol. 17(2), pages 157-179, March.
    10. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March.
    11. 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.
    12. Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
    13. Mirrlees, J. A., 1976. "Optimal tax theory : A synthesis," Journal of Public Economics, Elsevier, vol. 6(4), pages 327-358, November.
    14. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
    15. Weymark, John A., 1986. "A reduced-form optimal nonlinear income tax problem," Journal of Public Economics, Elsevier, vol. 30(2), pages 199-217, July.
    16. Chambers, Robert G., 1989. "Concentrated objective functions for nonlinear taxation models," Journal of Public Economics, Elsevier, vol. 39(3), pages 365-375, August.
    17. Dana Jr. James D., 1993. "The Organization and Scope of Agents: Regulating Multiproduct Industries," Journal of Economic Theory, Elsevier, vol. 59(2), pages 288-310, April.
    18. Armstrong, Mark & Rochet, Jean-Charles, 1999. "Multi-dimensional screening:: A user's guide," European Economic Review, Elsevier, vol. 43(4-6), pages 959-979, April.
    19. Wilson, Robert, 1997. "Nonlinear Pricing," OUP Catalogue, Oxford University Press, number 9780195115826, June.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Immervoll, Herwig & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup & Verdelin, Nicolaj, 2008. "An evaluation of the tax-transfer treatment of married couples in European countries," EUROMOD Working Papers EM7/08, EUROMOD at the Institute for Social and Economic Research.
    2. Volker Meier & Helmut Rainer, 2012. "Beyond Ramsey: Gender-Based Taxation with Non-Cooperative Couples," CESifo Working Paper Series 3966, CESifo Group Munich.
    3. Erwin Ooghe & Andreas Peichl, 2015. "Fair and Efficient Taxation under Partial Control," Economic Journal, Royal Economic Society, vol. 125(589), pages 2024-2051, December.
    4. 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.
    5. Aronsson, Thomas & Granlund, David, 2013. "Gender Norms, Work Hours, and Corrective Taxation," HUI Working Papers 83, HUI Research.
    6. Patricia Apps & Ray Rees, 2012. "Optimal Taxation, Child Care and Models of the Household," CEPR Discussion Papers 673, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    7. Spencer Bastani, 2013. "Gender-based and couple-based taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 653-686, August.
    8. Cremer, Helmuth & Lozachmeur, Jean-Marie & Roeder, Kerstin, 2017. "Household bargaining, spouses' consumption patterns and the design of commodity taxes," TSE Working Papers 17-767, Toulouse School of Economics (TSE).
    9. Cremer, Helmuth & Lozachmeur, Jean-Marie & Maldonado, Dario & Roeder, Kerstin, 2016. "Household bargaining and the design of couples’ income taxation," European Economic Review, Elsevier, vol. 89(C), pages 454-470.
    10. 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;European Society for Population Economics, vol. 26(3), pages 1195-1207, July.
    11. Meier, Volker & Rainer, Helmut, 2015. "Pigou meets Ramsey: Gender-based taxation with non-cooperative couples," European Economic Review, Elsevier, vol. 77(C), pages 28-46.
    12. Aronsson, Thomas & Granlund, David, 2015. "Gender norms, work hours, and corrective taxation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 56(C), pages 33-39.
    13. 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.
    14. Helmuth Cremer & Jean-Marie Lozachmeur & Pierre Pestieau, 2012. "Income taxation of couples and the tax unit choice," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 763-778, January.
    15. Blumkin, Tomer & Margalioth, Yoram & Sadka, Efraim, 2009. "Incorporating affirmative action into the welfare state," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1027-1035, October.
    16. Andrew Shephard & George-Levi Gayle, 2015. "Optimal Taxation, Marriage, Home Production, and Family Labor Supply," 2015 Meeting Papers 882, Society for Economic Dynamics.
    17. Casey Rothschild & Florian Scheuer, 2013. "Redistributive Taxation in the Roy Model," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 623-668.
    18. Patricia Apps & Ray Rees, 2010. "Australian Family Tax Reform and the Targeting Fallacy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(2), pages 153-175.
    19. B. Douglas Bernheim, 2010. "Emmanuel Saez: 2009 John Bates Clark Medalist," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 183-206, Summer.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:14:y:2007:i:3:p:225-261. See general 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: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.