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The Taxation of Married Couples in OECD Countries: A Need for Reform?


  • Henrik Jacobsen Kleven
  • Claus Thustrup Kreiner


This paper evaluates the tax treatment of married couples in OECD countries. While the existing literature has emphasized the relation between marginal taxes and hours of work, the novelty of our analysis is the incorporation of labor force participation responses. Indeed, the modern empirical labor market literature demonstrates that the observed difference in labor supply elasticities between spouses arises mainly because of a strong participation effect for the secondary earner. The distortion of entry-exit behavior is determined by the total tax burden on labor income and therefore by the average - rather than the marginal - rate of taxation. Accordingly, the efficient tax system involves relatively low average tax burdens for secondary earners in order to avoid discrimination against their participation in the labor market. However, our calculations of effective tax rates for married spouses reveal that the average tax burden of secondary earners is higher than that of primary earners in most of the OECD area, including countries where the framework is one of individual filing. Reforms which shift the tax burden from the secondary to the primary earner would generate substantial welfare gains across all countries.

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  • Henrik Jacobsen Kleven & Claus Thustrup Kreiner, "undated". "The Taxation of Married Couples in OECD Countries: A Need for Reform?," EPRU Working Paper Series 02-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:epruwp:02-13

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