A Note on the Taxation of Couples Under Income Uncertainty

Giacomo Corneo

FinanzArchiv: Public Finance Analysis, 2013, vol. 69, issue 1, 129-134

Abstract: A neglected implication of the choice of the tax unit is its impact on the consumption risk carried by taxpayers. As compared to individual taxation, joint taxation with income splitting provides couples with more insurance against the risk of earning inability for one of the spouses. If that risk is not insurable in markets and labor supply is exogenous, a change from individual taxation to joint taxation with income splitting can raise all couples' expected welfare.

Keywords: progressive income tax; tax unit; income uncertainty; insurance (search for similar items in EconPapers)
JEL-codes: H21 H24 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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DOI: 10.1628/001522108X663505

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