Institutional Affiliation: NBER
NBER Working Papers and Publications
|February 2019||Independent Taxation, Horizontal Equity, and Return-Free Filing|
with Jeffrey B. Liebman
in Tax Policy and the Economy, Volume 33, Robert A. Moffitt, editor
Switching from joint to independent taxation of spouses in married couples would reduce marginal tax rates on secondary earners, make the tax system marriage neutral, and facilitate return-free filing through exact withholding. This switch would, however, abandon the perspective that total household income is the best measure of ability to pay. This paper investigates the vertical and horizontal equity implications of a switch from joint to independent taxation of the sort that might occur in conjunction with adoption of return-free filing. There are two main findings. First, although there are winners and losers from the reform, there are enough free parameters such that it is possible to design an independent taxation system that approximately matches the current distribution of the ...