Optimal Taxation of Married Couples with Household Production

Henrik Jacobsen Kleven and Claus Kreiner

FinanzArchiv: Public Finance Analysis, 2007, vol. 63, issue 4, 498-518

Abstract: The literature suggests that the concern for economic efficiency calls for individual-based taxation of married couples with a higher rate on the primary earner. This paper reconsiders the choice of tax unit in the Becker model of household production. In the absence of restrictions on the use of commodity taxes, efficient taxation requires joint taxation of the family. In the presence of restricted commodity taxation, the income tax should compensate for the erroneous commodity taxes. In this case, individual taxation is typically optimal, but not necessarily with a higher rate on primary earners as usually suggested.

Keywords: optimal taxation; married couples; home production (search for similar items in EconPapers)
JEL-codes: D13 H21 J22 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (15)

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DOI: 10.1628/001522107X268998

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