On the Optimality of Joint Taxation for Non-Cooperative Couples

Volker Meier and Helmut Rainer

No 3128, CESifo Working Paper Series from CESifo

Abstract: We present a non-cooperative model of a family’s time allocation between work and a home-produced public good, and examine whether the income tax should apply to couples or individuals. While tax-induced labor supply distortions lead to overprovision of the public good, spouses’ failure to internalize the collective effect of their choices points towards underprovision. A large parameter range exists for which a move from individual to joint taxation improves the welfare of both spouses. The source of Pareto-improvement consists in moving the level of the public good closer to its first-best, while an adjustment of intra-family transfers compensates the secondary earner for the increased tax load.

Keywords: individual taxation; joint taxation; household production; public goods (search for similar items in EconPapers)
JEL-codes: D13 D62 H23 H24 J22 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: On the optimality of joint taxation for noncooperative couples (2012)
Working Paper: On the Optimality of Joint Taxation for Non-Cooperative Couples (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3128

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