Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35567 
Year of Publication: 
2008
Series/Report no.: 
IZA Discussion Papers No. 3819
Publisher: 
Institute for the Study of Labor (IZA), Bonn
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: 
Document Type: 
Working Paper

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