Redistributive taxation and the household : the case of individual filings
Working paper
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http://hdl.handle.net/11250/163290Utgivelsesdato
2002-01Metadata
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Sammendrag
In this paper I look at the tax treatment of households under individual
filings and characterise the efficiency properties of an income
tax schedule that redistributes from rich to poor households. Because
tax liabilities are determined on individual incomes but the decision
to earn those incomes are made at the household level, the tax liable
members of the same household can side trade leisure for net income
with one another, and such side trade enables them to carry out tax
arbitrage. I analyse the problem for a two class economy both with
and without perfect assortative mating. The main conclusion is that
the prevention of tax arbitrage imposes structure on the graduation of the tax schedule.
Utgiver
Norwegian School of Economics and Business Administration. Department of EconomicsSerie
Discussion paper2002:2