Tax Planning of Married Couples and Intra-Household Income Inequality

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Publication Details

Author(s): Büttner T, Erbe K, Grimm V
Publication year: 2018
Title of series: ssrn
ISSN: 0047-2727


Abstract

This paper examines tax planning of married couples under separate
taxation. A theoretical analysis uses a family decision-model with a
household public good to show that the secondary earner might veto
against tax planning if the realization of tax savings increases
intra-household income inequality. The empirical analysis exploits a
specific feature of the German tax system, which allows married couples
to save taxes by deviating from the default symmetric payroll-tax
treatment and assigning a favorable tax treatment to the primary earner
and an unfavorable tax treatment to the secondary earner. Based on a
representative random sample of individual tax files, the empirical
results confirm the role of the income distribution. Opting for a
tax-minimizing treatment is found to be less likely if this is
associated with larger losses in the net income of the secondary earner.
While this holds irrespective of which of the spouses has higher
earnings, couples where the wife is the primary earner display a general
reluctance to assign the favorable tax treatment to the wife.


FAU Authors / FAU Editors

Büttner, Thiess Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Finanzwissenschaft
Erbe, Katharina
Lehrstuhl für Volkswirtschaftslehre, insbesondere Finanzwissenschaft
Grimm, Veronika Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie


How to cite

APA:
Büttner, T., Erbe, K., & Grimm, V. (2018). Tax Planning of Married Couples and Intra-Household Income Inequality.

MLA:
Büttner, Thiess, Katharina Erbe, and Veronika Grimm. Tax Planning of Married Couples and Intra-Household Income Inequality. 2018.

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Last updated on 2019-23-07 at 14:50