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The Optimal Taxation of Couples

The Optimal Taxation of Couples PDF Author: Patricia Apps
Publisher:
ISBN:
Category : Income tax
Languages : en
Pages : 32

Book Description


The Optimal Taxation of Couples

The Optimal Taxation of Couples PDF Author: Patricia Apps
Publisher:
ISBN:
Category : Income tax
Languages : en
Pages : 32

Book Description


The Optimal Taxation of Couples

The Optimal Taxation of Couples PDF Author: Mikhail Golosov
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

Book Description
We consider optimal joint nonlinear earnings taxation of couples. We use multi-dimensional mechanism design techniques to study this problem and show that the first-order approach - that restricts attention to only local incentive constraints - is valid for a broad set of primitives. Optimal taxes are characterized by the solution to a certain second-order partial differential equation. Using the Coarea Formula, we solve this equation for various conditional averages of optimal tax rates and identify key forces that determine the optimal tax rates; show how these rates depend on earnings of each spouse, correlation in spousal earnings, and redistributive objectives of the planner; compare optimal rates for primary and secondary earners; identify both the conditions under which simple tax systems are optimal and the sources of welfare gains from more sophisticated taxes when those conditions are not satisfied. Under realistic assumptions, optimal tax rates for married individuals are increasing in correlation of spousal earnings. However, they remain lower than the tax rates for single individuals, and the marginal rates for one spouse increase (decrease) in the earnings of the other if both spouses have low (high) earnings.

The Optimal Income Taxation of Couples

The Optimal Income Taxation of Couples PDF Author: Henrik Jacobsen Kleven
Publisher:
ISBN:
Category : Couples
Languages : en
Pages : 76

Book Description
This paper analyzes the optimal income tax treatment of couples. Each couple is modelled as a single rational economic agent supplying labor along two dimensions: primary and secondary earnings. We consider fully general joint income tax systems. Separate taxation is never optimal if social welfare depends on total couple incomes. In a model where secondary earners make only a binary work decision (work or not work), we demonstrate that the marginal tax rate of the primary earner is lower when the spouse works. As a result, the tax distortion on the secondary earner decreases with the earnings of the primary earner and actually vanishes to zero asymptotically. Such negative jointness is optimal because redistribution from two-earner toward one-earner couples is more valuable when primary earner income is lower. We also consider a model where both spouses display intensive labor supply responses. In that context, we show that, starting from the optimal separable tax schedules, introducing some negative jointness is always desirable. Numerical simulations suggest that, in that model, it is also optimal for the marginal tax rate on one earner to decrease with the earnings of his/her spouse. We argue that many actual redistribution systems, featuring family-based transfers combined with individually-based taxes, generate schedules with negative jointness.

The Optimal Income Taxation of Couples

The Optimal Income Taxation of Couples PDF Author: Henrik Jacobsen Kleven
Publisher:
ISBN:
Category :
Languages : en
Pages : 63

Book Description
This paper analyzes the optimal income tax treatment of couples. Each couple is modelled as a single rational economic agent supplying labor along two dimensions: primary and secondary earnings. We consider fully general joint income tax systems. Separate taxation is never optimal if social welfare depends on total couple incomes. In a model where secondary earners make only a binary work decision (work or not work), we demonstrate that the marginal tax rate of the primary earner is lower when the spouse works. As a result, the tax distortion on the secondary earner decreases with the earnings of the primary earner and actually vanishes to zero asymptotically. Such negative jointness is optimal because redistribution from two-earner toward one-earner couples is more valuable when primary earner income is lower. We also consider a model where both spouses display intensive labor supply responses. In that context, we show that, starting from the optimal separable tax schedules, introducing some negative jointness is always desirable. Numerical simulations suggest that, in that model, it is also optimal for the marginal tax rate on one earner to decrease with the earnings of his/her spouse. We argue that many actual redistribution systems, featuring family-based transfers combined with individually-based taxes, generate schedules with negative jointness.

Optimal Taxation of Married Couples with Household Production

Optimal Taxation of Married Couples with Household Production PDF Author: Henrik Jacobsen Kleven
Publisher:
ISBN:
Category :
Languages : en
Pages : 23

Book Description


Optimal Taxation, Marriage, Home Production, and Family Labor Supply

Optimal Taxation, Marriage, Home Production, and Family Labor Supply PDF Author: George-Levi Gayle
Publisher:
ISBN:
Category :
Languages : en
Pages : 66

Book Description
An empirical approach to optimal income taxation design is developed within an equilibrium collective marriage market model with imperfectly transferable utility. Taxes distort labour supply and time allocation decisions, as well as marriage market outcomes, and the within household decision process. Using data from the American Community Survey and American Time Use Survey, we structurally estimate our model and explore empirical design problems. We consider the optimal design problem when the planner is able to condition taxes on marital status, as in the U.S. tax code, but we allow the schedule for married couples to have an arbitrary form of tax jointness. Our results suggest that the optimal tax system for married couples is characterized by negative jointness, although the welfare gains from this jointness are shown to be quite modest.

Optimal Income Taxation of Married Couples

Optimal Income Taxation of Married Couples PDF Author: Peter Haan
Publisher:
ISBN:
Category :
Languages : en
Pages :

Book Description


Optimal taxation of couples

Optimal taxation of couples PDF Author: Patricia Apps
Publisher:
ISBN:
Category :
Languages : de
Pages : 50

Book Description


Optimal Tax Treatment of the Family

Optimal Tax Treatment of the Family PDF Author: Michael J. Boskin
Publisher:
ISBN:
Category : Husband and wife
Languages : en
Pages : 22

Book Description


The Optimal Income Taxation of Couples as a Multi-dimensional Screening Problem

The Optimal Income Taxation of Couples as a Multi-dimensional Screening Problem PDF Author: Henrik Jacobsen Kleven
Publisher:
ISBN:
Category : Couples
Languages : en
Pages : 42

Book Description