The Optimal Income Taxation of Couples
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The Optimal Income Taxation of Couples. / Kleven, Henrik Jacobsen; Kreiner, Claus Thustrup; Saez, Emmanuel.
I: Econometrica, Bind 77, Nr. 2, 2009, s. 537-560.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - The Optimal Income Taxation of Couples
AU - Kleven, Henrik Jacobsen
AU - Kreiner, Claus Thustrup
AU - Saez, Emmanuel
PY - 2009
Y1 - 2009
N2 - This paper analyzes the general nonlinear optimal income tax for couples, a multidimensional screening problem. Each couple consists of a primary earner who always participates in the labor market, but makes an hours-of-work choice, and a secondary earner who chooses whether or not to work. If second-earner participation is a signal of the couple being better (worse) off, we prove that optimal tax schemes display a positive tax (subsidy) on secondary earnings and that the tax (subsidy) on secondary earnings decreases with primary earnings and converges to zero asymptotically. We present calibrated microsimulations for the United Kingdom showing that decreasing tax rates on secondary earnings is quantitatively significant and consistent with actual income tax and transfer programs.
AB - This paper analyzes the general nonlinear optimal income tax for couples, a multidimensional screening problem. Each couple consists of a primary earner who always participates in the labor market, but makes an hours-of-work choice, and a secondary earner who chooses whether or not to work. If second-earner participation is a signal of the couple being better (worse) off, we prove that optimal tax schemes display a positive tax (subsidy) on secondary earnings and that the tax (subsidy) on secondary earnings decreases with primary earnings and converges to zero asymptotically. We present calibrated microsimulations for the United Kingdom showing that decreasing tax rates on secondary earnings is quantitatively significant and consistent with actual income tax and transfer programs.
KW - Faculty of Social Sciences
KW - multidimensional screening
U2 - 10.3982/ECTA7343
DO - 10.3982/ECTA7343
M3 - Journal article
VL - 77
SP - 537
EP - 560
JO - Econometrica
JF - Econometrica
SN - 0012-9682
IS - 2
ER -
ID: 11201244