Optimal Distribution and Taxation of the Family

Louis Kaplow

No 4189, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Income tax burdens on family units are adjusted to reflect differences in ability to pay attributable to whether the unit consists of a single individual or a married couple and how many dependents are present. Substantial controversy exists over the appropriate forms of adjustment, and existing approaches to taxation of the family vary greatly across jurisdictions. This article derives equitable relative tax burdens for different family configurations from a utilitarian welfare function. The analysis considers how relative burdens should depend on the extent to which resources are shared among family members, the existence of economies of scale, the presence of altruism among family members, whether expenditures on children should be viewed as part of parents' consumption, and the possibility that some family members (children) have different utility functions from others.

Date: 1992-10
Note: PE
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Published as Scandinavian Journal of Economics, vol. 98, no. 1, pp. 75-92, (1996).

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