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Optimal Taxation, Marriage, Home Production, and Family Labor Supply

George-Levi Gayle (glgayle@me.com) and Andrew Shephard

No 2016-10, Working Papers from Federal Reserve Bank of St. Louis

Abstract: An empirical approach to optimal income taxation design is developed within an equilibrium collective marriage market model with imperfectly transferable utility. Taxes distort labour supply and time allocation decisions, as well as marriage market outcomes, and the within household decision process. Using data from the American Community Survey and American Time Use Survey, we structurally estimate our model and explore empirical design problems. We consider the optimal design problem when the planner is able to condition taxes on marital status, as in the U.S. tax code, but we allow the schedule for married couples to have an arbitrary form of tax jointness. Our results suggest that the optimal tax system for married couples is characterized by negative jointness, although the welfare gains from this jointness are shown to be quite modest.

JEL-codes: C14 C71 D13 H21 J12 J22 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2016-05-23
New Economics Papers: this item is included in nep-lma, nep-pbe and nep-pub
References: Add references at CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Optimal Taxation, Marriage, Home Production, and Family Labor Supply (2019) Downloads
Working Paper: Optimal Taxation, Marriage, Home Production, and Family Labor Supply (2015) Downloads
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DOI: 10.20955/wp.2016.010

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