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The Taxation of Couples

Author

Listed:
  • Felix Bierbrauer

    (University of Cologne)

  • Pierre Boyer

    (Ecole polytechnique and CREST)

  • Andreas Peichl

    (LMU Munich, ifo Institute, CESifo, IHS and IZA)

  • Daniel Weishaar

    (LMU Munich)

Abstract

Are reforms towards individual taxation politically feasible? Are they desirable from a welfare perspective? We develop a method to answer such questions and apply it to the US federal income tax since the 1960s. Main findings are: As of today, Pareto-improvements require a move away from joint taxation. Revenue-neutral reforms towards individual taxation are not Pareto-improving, but attract majoritysupport. Such reforms are rejected by Rawlsian welfare measures and supported by ones with weights that are increasing in the secondary earner’s income share. Thus, there is a tension between the welfare of “the poor” and the welfare of “working women.”

Suggested Citation

  • Felix Bierbrauer & Pierre Boyer & Andreas Peichl & Daniel Weishaar, 2023. "The Taxation of Couples," Rationality and Competition Discussion Paper Series 405, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:405
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    More about this item

    Keywords

    taxation of couples; tax reforms; optimal taxation; political economy; non-linear income taxation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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