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A note on the taxation of couples under income uncertainty

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  • Corneo, Giacomo

Abstract

An unduly neglected implication of the choice of the tax unit is its impact on the consumption risk carried by taxpayers. As compared to individual taxation, joint taxation with income splitting provides couples with more insurance against the risk of earning inability for one of the spouses. If that risk is not insurable in markets, replacing individual taxation with joint taxation with income splitting can generate a Pareto-improvement.

Suggested Citation

  • Corneo, Giacomo, 2011. "A note on the taxation of couples under income uncertainty," Discussion Papers 2011/16, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:201116
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    Cited by:

    1. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Reforming Family Taxation in Germany - Labor Supply vs. Insurance Effects," CESifo Working Paper Series 4386, CESifo.
    2. Bachmann Ronald & Jäger Philipp & Jessen Robin, 2021. "A Split Decision: Welche Auswirkungen hätte die Abschaffung des Ehegattensplittings auf das Arbeitsangebot und die Einkommensverteilung?," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 70(2), pages 105-131, August.
    3. Hermann Buslei & Katharina Wrohlich, 2014. "Besteuerung von Paaren: das Ehegattensplitting und seine Alternativen," DIW Roundup: Politik im Fokus 21, DIW Berlin, German Institute for Economic Research.
    4. Giacomo Corneo, 2025. "Assortative Mating and Couple Taxation: A Note," CESifo Working Paper Series 11643, CESifo.

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    More about this item

    Keywords

    progressive income tax; tax unit; insurance;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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