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Taxation of Couples under Assortative Mating

Author

Listed:
  • Alexander Frankel

Abstract

I present a simple and tractable model of the optimal taxation of married couples, working off of the multidimensional screening framework of Armstrong and Rochet (1999). In particular, I study how the tax code varies with the degree of assortative mating. One result is that the "negative jointness" of marginal tax rates found in Kleven, Kreiner, and Saez (2007, 2009) for couples with uncorrelated earnings should be attenuated in the presence of assortative mating. When mating is sufficiently assortative, the optimal tax schedule is separable: an individual's taxes do not depend on his or her spouse's income.

Suggested Citation

  • Alexander Frankel, 2014. "Taxation of Couples under Assortative Mating," American Economic Journal: Economic Policy, American Economic Association, vol. 6(3), pages 155-177, August.
    • Handle: RePEc:aea:aejpol:v:6:y:2014:i:3:p:155-77
    Note: DOI: 10.1257/pol.6.3.155
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    Citations

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    Cited by:

    1. Thomas Koch & Javier Birchenall, 2016. "Taking versus taxing: an analysis of conscription in a private information economy," Public Choice, Springer, vol. 167(3), pages 177-199, June.
    2. Guy Laroque & Nicola Pavoni, 2017. "Optimal taxation in occupational choice models: An Application to the Work Decisions of Couples," Working Papers hal-03915322, HAL.
    3. Hanno Foerster & Tim Obermeier & Bastian Schulz, 2024. "Job displacement, remarriage and marital sorting," CEP Discussion Papers dp2045, Centre for Economic Performance, LSE.
    4. Takuya Obara & Yoshitomo Ogawa, 2020. "Optimal Taxation in an Endogenous Fertility Model with Non-Cooperative Couples," Discussion Paper Series 211, School of Economics, Kwansei Gakuin University, revised Jan 2021.
    5. Cremer, Helmuth & Lozachmeur, Jean-Marie & Maldonado, Dario & Roeder, Kerstin, 2016. "Household bargaining and the design of couples’ income taxation," European Economic Review, Elsevier, vol. 89(C), pages 454-470.
    6. Louis Kaplow, 2022. "Optimal Income Taxation," NBER Working Papers 30199, National Bureau of Economic Research, Inc.
    7. Melanie Guldi & Lucie Schmidt, 2017. "Taxes, Transfers, and Women’s Labor Supply in the United States," Working Papers 2017-01, University of Central Florida, Department of Economics.
    8. Friedrichsen, Jana, 2018. "Signals Sell: Product Lines when Consumers Differ Both in Taste for Quality and Image Concern," Rationality and Competition Discussion Paper Series 70, CRC TRR 190 Rationality and Competition.
    9. Michal Horváth & Zuzana Siebertová, 2019. "Employment Effects of Income Tax Reforms: Lessons from Slovakia," Discussion Papers 54, Central European Labour Studies Institute (CELSI).
    10. Nie, Haifeng & Xing, Chunbing, 2019. "Education expansion, assortative marriage, and income inequality in China," China Economic Review, Elsevier, vol. 55(C), pages 37-51.
    11. Takuya Obara & Yoshitomo Ogawa, 2024. "Optimal taxation in an endogenous fertility model with non-cooperative behavior," Review of Economics of the Household, Springer, vol. 22(1), pages 173-197, March.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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