Income taxation of couples and the tax unit choice

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Publication Details

Output type: Journal article

Author list: Cremer H, Lozachmeur JM, Pestieau P

Publisher: Springer

Publication year: 2012

Journal: Journal of Population Economics (0933-1433)

Volume number: 25

Issue number: 2

Start page: 763

End page: 778

Number of pages: 16

ISSN: 0933-1433

eISSN: 1432-1475

Languages: English-Great Britain (EN-GB)

Unpaywall Data

Open access status: green

Full text URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2007_13.pdf

Abstract

We study the optimal income taxation of couples. We determine the resulting intra-family labor supply allocation and its implication for the choice of the tax unit (individual versus joint taxation). We provide a general condition for full joint taxation to arise. We also study how the spouses' respective labor supply decisions are distorted when the condition does not hold. In particular, we show that, depending on the pattern of mating, the celebrated result according to which the spouse with the more elastic labor supply faces the lower marginal tax rates may or may not hold in our setting.

Keywords

Household labor supply, Optimal income taxation, Tax unit

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