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A welfare evaluation of the 1986 tax reform for married couples in the United States

Matteo Picchio () and Giacomo Valletta ()
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Giacomo Valletta: EDHEC Business School

International Tax and Public Finance, 2018, vol. 25, issue 3, 757-807

Abstract: Abstract This paper evaluates the welfare effects of the 1986 Tax Reform Act (TRA86). We rely on different welfare metrics, which fully retain preference heterogeneity and are based on different ethical priors. We estimate utility functions with preference heterogeneity on the basis of structural models of family labor supply. Then, using these estimated preferences, we compute and compare different well-being rankings corresponding to different ways of measuring well-being. Finally, we identify the losers and the winners of TRA86, in absolute and relative terms, for each of the welfare metrics.

Keywords: Welfare measures; Tax reform; Preference heterogeneity; Discrete model; Labor supply (search for similar items in EconPapers)
JEL-codes: D63 H31 J22 (search for similar items in EconPapers)
Date: 2018
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Related works:
Working Paper: A Welfare Evaluation of the 1986 Tax Reform for Married Couples in the United States (2016) Downloads
Working Paper: Welfare Evaluation of the 1986 Tax Reform for Married Couples in the United States (2015) Downloads
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