Tax Planning of Married Couples and Intra-Household Income Inequality

Journal article
(Original article)


Publication Details

Author(s): Büttner T, Erbe K, Grimm V
Journal: Journal of Public Economics
Publication year: 2019
ISSN: 0047-2727
Language: English


Abstract

This paper examines tax planning of married couples under separate taxation. It shows that concerns about the intra-household income distribution prevent couples from minimizing tax payments. 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 favorable tax treatment to the primary earner and unfavorable tax treatment to the secondary earner. Based on a representative random sample of individual tax files, we find that a couple is less likely to choose the tax-minimizing treatment if tax planning is associated with a larger decline of the net-of-tax income of the secondary earner. This applies regardless of whether the husband or the wife is the main earner. However, couples where the wife is the main earner are generally more reluctant to assign the more 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


Research Fields

Tax and Tax Policy
Research focus area of a faculty: Fachbereich Wirtschaftswissenschaften


How to cite

APA:
Büttner, T., Erbe, K., & Grimm, V. (2019). Tax Planning of Married Couples and Intra-Household Income Inequality. Journal of Public Economics.

MLA:
Büttner, Thiess, Katharina Erbe, and Veronika Grimm. "Tax Planning of Married Couples and Intra-Household Income Inequality." Journal of Public Economics (2019).

BibTeX: 

Last updated on 2019-22-07 at 15:31