On the optimality of joint taxation for noncooperative couples
We present a noncooperative model of a family’s time allocation between work and a home-produced public good, and examine whether the income tax should apply to couples or individuals. While tax-induced labor supply distortions lead to overprovision of the public good, spouses’ failure to internalize the collective effect of their choices points towards underprovision. A large parameter range exists for which a move from individual to joint taxation improves the welfare of both spouses. The source of Pareto-improvement consists in moving the level of the public good closer to its first-best, while an adjustment of intra-family transfers compensates the secondary earner for the increased tax load.
Year of publication: |
2012
|
---|---|
Authors: | Meier, Volker ; Rainer, Helmut |
Institutions: | Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München |
Saved in:
Saved in favorites
Similar items by person
-
On the Optimality of Joint Taxation for Non-Cooperative Couples
Meier, Volker, (2011)
-
Beyond Ramsey: Gender-Based Taxation with Non-Cooperative Couples
Meier, Volker, (2013)
-
On the Optimality of Joint Taxation for Non-Cooperative Couples
Meier, Volker, (2011)
- More ...