Too Much of a Good Thing? Using Tax Incentives to Stimulate Dual-Earner Couples

Henk-Wim de Boer (), Egbert L. W. Jongen () and Patrick Koot ()
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Henk-Wim de Boer: Independent Researcher
Egbert L. W. Jongen: Leiden University
Patrick Koot: Dutch Ministry of Social Affairs and Employment

No 16702, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Following major tax-benet reforms over the past decades, the Netherlands is the international front-runner in stimulating dual-earner couples via the tax system. In this paper we consider whether or not it has perhaps gone too far, using the inverse-optimal method of optimal taxation to recover the implicit social welfare weights for single- and dual-earner couples over time. Our results indicate that the reforms may have gone too far, leading to social welfare weights that are no longer monotonically declining in household income and even negative for some groups (suggesting Pareto-improving reforms are possible). We also consider optimal tax systems for dierent social preferences.

Keywords: optimal taxation; revealed social preferences; dual earners (search for similar items in EconPapers)
JEL-codes: C63 H21 H31 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2023-12
New Economics Papers: this item is included in nep-lma, nep-pbe and nep-pub
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Citations: View citations in EconPapers (1)

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