Welfare Effects of a Shift of Joint to Individual Taxation in the German Personal Income Tax

André Decoster and Peter Haan

FinanzArchiv: Public Finance Analysis, 2014, vol. 70, issue 4, 599-624

Abstract: We empirically derive the welfare effects of a shift from joint to individual taxation of married households in Germany. For the welfare evaluation we estimate the preference heterogeneity and use normative welfare concepts proposed by Fleurbaey (2006) to address the difficulties of comparison between and aggregation of heterogeneous agents. Our results suggest that the normative choice of the welfare metric can be crucial, in particular for the simple question who are the gainers and who are the losers in a reform. Further, we find that it is possible to design a system of individual taxation that would be welfare-improving for different welfare metrics.

Keywords: taxation of couples; welfare measures; labor supply; preference heterogeneity (search for similar items in EconPapers)
JEL-codes: C35 D63 D78 H24 H31 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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DOI: 10.1628/001522108X685500

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