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Optimal Taxation of Secondary Earners in the Netherlands: Has Equity Lost Ground?

Henk-Wim de Boer (), Egbert Jongen () and Patrick Koot ()
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Henk-Wim de Boer: CPB Netherlands Bureau for Economic Policy Analysis
Egbert Jongen: CPB Netherlands Bureau for Economic Policy Analysis
Patrick Koot: CPB Netherlands Bureau for Economic Policy Analysis

CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: The Netherlands witnessed major reforms in the taxation of (potential) secondary earners over the past decade. Using the inverse-optimal method of optimal taxation we recover the implicit social welfare weights of single- and dual-earner couples over time. The social welfare weights are grosso modo well-behaved before the reforms. However, after the reforms, they are no longer monotonically declining in income and sometimes negative, suggesting that Pareto-improving reforms are possible. Taken at face value, these results suggest an imbalance between equity and efficiency. However, other considerations may rationalize these fi ndings, like differences in preferences over formal income and informal care.

JEL-codes: C63 H21 H31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2018-02
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