Optimal Tax Treatment of the Family: Married Couples / Michael J. Boskin, Eytan Sheshinski.

Format:

Book

Author/Creator:

Boskin, Michael J.

Contributor:

National Bureau of Economic Research.

Sheshinski, Eytan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0368.

NBER working paper series no. w0368

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Optimal Tax Treatment of the Family

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1979.

Summary:

This paper examines the appropriate tax treatment of the family in a series of analytical models and numerical examples. For a population of taxpaying couples which differ in earning capacity, we derive the optimal tax rates for each potential earner. These rates depend crucially upon own and cross labor supply elasticities and the joint distribution of wage rates. Our results suggest that the current system of income splitting in the United States, under which husbands and wives face equal marginal tax rates, is non-optimal. Using results from recent econometric studies, and allowing for a sensitivity analysis, the optimal tax rates on secondary workers in the family are much lower than those on primary earners. Indeed, our best estimate is that the secondary earner would face tax rates only one-half as high as primary earners.

Notes:

Print version record

July 1979.