An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries

Publikation: Working paperForskning

Standard

An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries. / Immervoll, Herwig; Kleven, Henrik Jacobsen; Kreiner, Claus Thustrup; Verdelin, Nicolaj.

Bonn, 2009.

Publikation: Working paperForskning

Harvard

Immervoll, H, Kleven, HJ, Kreiner, CT & Verdelin, N 2009 'An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries' Bonn.

APA

Immervoll, H., Kleven, H. J., Kreiner, C. T., & Verdelin, N. (2009). An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries.

Vancouver

Immervoll H, Kleven HJ, Kreiner CT, Verdelin N. An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries. Bonn. 2009.

Author

Immervoll, Herwig ; Kleven, Henrik Jacobsen ; Kreiner, Claus Thustrup ; Verdelin, Nicolaj. / An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries. Bonn, 2009.

Bibtex

@techreport{35b175f009b411df825d000ea68e967b,
title = "An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries",
abstract = "This paper presents an evaluation of the tax-transfer treatment of married couples in 15 EU countries using the EUROMOD microsimulation model. First, we show that many tax-transfer schemes in Europe feature negative jointness defined as a situation where the tax rate on one person depends negatively on the earnings of the spouse. This stands in contrast to the previous literature on this question, which has focused on a specific form of positive jointness. The presence of negative jointness is driven by family-based and means-tested transfer programs combined with tax systems that usually feature very little jointness. Second, we consider the labour supply distortion on secondary earners relative to primary earners implied by the current tax-transfer systems, and study the welfare effects of small reforms that change the relative taxation of spouses. By adopting a small-reform methodology, it is possible to set out a simple analysis based on more realistic labour supply models than those considered in the existing literature. We present microsimulations showing that simple revenue-neutral reforms that lower the tax burden on secondary earners are associated with substantial welfare gains in most countries. Finally, we consider the tax-transfer implications of marriage and estimate the so-called marriage penalty. For most countries, we find large marriage penalties at the bottom of the distribution driven primarily by features of the transfer system.",
author = "Herwig Immervoll and Kleven, {Henrik Jacobsen} and Kreiner, {Claus Thustrup} and Nicolaj Verdelin",
year = "2009",
language = "English",
type = "WorkingPaper",

}

RIS

TY - UNPB

T1 - An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries

AU - Immervoll, Herwig

AU - Kleven, Henrik Jacobsen

AU - Kreiner, Claus Thustrup

AU - Verdelin, Nicolaj

PY - 2009

Y1 - 2009

N2 - This paper presents an evaluation of the tax-transfer treatment of married couples in 15 EU countries using the EUROMOD microsimulation model. First, we show that many tax-transfer schemes in Europe feature negative jointness defined as a situation where the tax rate on one person depends negatively on the earnings of the spouse. This stands in contrast to the previous literature on this question, which has focused on a specific form of positive jointness. The presence of negative jointness is driven by family-based and means-tested transfer programs combined with tax systems that usually feature very little jointness. Second, we consider the labour supply distortion on secondary earners relative to primary earners implied by the current tax-transfer systems, and study the welfare effects of small reforms that change the relative taxation of spouses. By adopting a small-reform methodology, it is possible to set out a simple analysis based on more realistic labour supply models than those considered in the existing literature. We present microsimulations showing that simple revenue-neutral reforms that lower the tax burden on secondary earners are associated with substantial welfare gains in most countries. Finally, we consider the tax-transfer implications of marriage and estimate the so-called marriage penalty. For most countries, we find large marriage penalties at the bottom of the distribution driven primarily by features of the transfer system.

AB - This paper presents an evaluation of the tax-transfer treatment of married couples in 15 EU countries using the EUROMOD microsimulation model. First, we show that many tax-transfer schemes in Europe feature negative jointness defined as a situation where the tax rate on one person depends negatively on the earnings of the spouse. This stands in contrast to the previous literature on this question, which has focused on a specific form of positive jointness. The presence of negative jointness is driven by family-based and means-tested transfer programs combined with tax systems that usually feature very little jointness. Second, we consider the labour supply distortion on secondary earners relative to primary earners implied by the current tax-transfer systems, and study the welfare effects of small reforms that change the relative taxation of spouses. By adopting a small-reform methodology, it is possible to set out a simple analysis based on more realistic labour supply models than those considered in the existing literature. We present microsimulations showing that simple revenue-neutral reforms that lower the tax burden on secondary earners are associated with substantial welfare gains in most countries. Finally, we consider the tax-transfer implications of marriage and estimate the so-called marriage penalty. For most countries, we find large marriage penalties at the bottom of the distribution driven primarily by features of the transfer system.

M3 - Working paper

BT - An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries

CY - Bonn

ER -

ID: 17215650