NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Optimal Tax Treatment of the Family: Married Couples

Michael J. Boskin, Eytan Sheshinski

NBER Working Paper No. 368 (Also Reprint No. r0468)
Issued in July 1979
NBER Program(s):   PE

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.

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Document Object Identifier (DOI): 10.3386/w0368

Published: Boskin, Michael J. and Eytan Sheshinski. "Optimal Tax Treatment of the Family: Married Couples." Journal of Public Economics, Vol. 20, (August 1983),pp. 281-297. Journal of Economic Literature, Vol. 22, No. 1, (March 1984) . citation courtesy of

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