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A Revised Efficiency Principle for the Taxation of Couples

Author

Listed:
  • Henrik Jacobsen Kleven

    (Institute of Economics, University of Copenhagen)

  • Claus Thustrup Kreiner

    (Institute of Economics, University of Copenhagen)

Abstract

We reconsider the result that efficient taxation involves a lower marginal tax on secondary earners than on primary earners. Introducing labor force participation responses into the analysis, we show that a second-earner tax allowance is better than selective marginal tax rates.

Suggested Citation

  • Henrik Jacobsen Kleven & Claus Thustrup Kreiner, 2004. "A Revised Efficiency Principle for the Taxation of Couples," EPRU Working Paper Series 04-09, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:epruwp:04-09
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    File URL: http://www.econ.ku.dk/epru/files/wp/wp-04-09.pdf
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    References listed on IDEAS

    as
    1. Boskin, Michael J. & Sheshinski, Eytan, 1983. "Optimal tax treatment of the family: Married couples," Journal of Public Economics, Elsevier, vol. 20(3), pages 281-297, April.
    2. Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-963, June.
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    Cited by:

    1. Eichhorst, Werner & Thode, Eric, 2010. "Report No. 30: Vereinbarkeit von Familie und Beruf 2010," IZA Research Reports 30, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    optimal taxation; married couples; labor supply behavior;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D10 - Microeconomics - - Household Behavior - - - General

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