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Tax Minimization by French Cohabiting Couples

Author

Listed:
  • Olivier Bargain
  • Damien Echevin
  • Audrey Etienne
  • Nicolas Moreau
  • Adrien Pacifico

Abstract

This paper examines the tax returns of French cohabiting couples with children. These couples form two separate tax units and must optimally assign their children to the tax unit of one of the parents to optimize tax rebates. We find that children are allocated in a way that minimizes tax liability in 75 percent of cohabiting households. The 25 percent of households that fail to minimize their liability appear to use heuristics, are influenced by inertia, and possibly fail to fully cooperate as suboptimal couples tend to separate more and marry less in the subsequent period.

Suggested Citation

  • Olivier Bargain & Damien Echevin & Audrey Etienne & Nicolas Moreau & Adrien Pacifico, 2022. "Tax Minimization by French Cohabiting Couples," National Tax Journal, University of Chicago Press, vol. 75(2), pages 265-296.
    • Handle: RePEc:ucp:nattax:doi:10.1086/719427
    DOI: 10.1086/719427
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    Cited by:

    1. Nicolas Moreau, 2023. "The zero effect of income tax on the timing of birth: some evidence on French data," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(3), pages 757-783, June.

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