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Title:Optimal income taxation of married couples: an empirical analysis of joint and individual taxation PDF Logo
Authors:Haan, Peter
Navarro, Dolores
Issue Date:2008
Series/Report no.:IZA discussion papers 3819
Abstract:In this paper we develop a discrete model of optimal taxation of married couples and empirically discuss the optimality of income taxation for this group. To this end, we derive the social welfare function which guarantees that joint taxation of married couples is optimal. We will contrast this welfare function with the one that makes a system of individual taxation optimal. For the empirical application we use a static structural labor supply model to estimate the preferences of households. We find that the system of joint taxation is only optimal when the government has a high taste for redistribution towards one-earner couples and a very low or even negative taste for redistribution towards couples in which both partners earn a similar amount of income. In contrast, the optimality of individual taxation is less dependent of the working composition within the household.
Subjects:Optimal taxation of married couples
joint taxation
labor supply estimation
JEL:C25
Persistent Identifier of the first edition:urn:nbn:de:101:1-20081127475
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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