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Research Seminar of International Laboratory for Macroeconomic Analysis: Egor Malkov «Optimal Income Taxation of Singles and Couples»

Event ended

Dear Colleagues,

International Laboratory for Macroeconomic Analysis invites everyone to join our research seminar on the 28th of  October 2021 (Thursday) at 04:20 PM (Moscow). 

Speaker: Egor Malkov (University of Minnesota)

Theme: «Optimal Income Taxation of Singles and Couples»

Abstract:

How should singles and married couples be taxed on their income? I answer this question using a general equilibrium overlapping generations model that features single and married households facing uninsurable idiosyncratic labor productivity risk, intensive and extensive margins of labor supply, and human capital accumulation. I analyze the optimal tax reform within a parametric class of tax and transfer functions that are allowed to depend on marital status. I estimate the model to match the U.S. economy and find that tax progressivity should be lower for couples than for singles. Next, the optimal tax schedule has a higher degree of progressivity for singles and lower progressivity for couples relative to the actual income tax policy. Replacing the U.S. tax and transfer system with the optimal schedule is associated with sizable welfare gains. I show that explicitly modeling couples and accounting for the extensive margin of labor supply combined with human capital accumulation is quantitatively important. Private within-household insurance through responses of spousal labor supply reduces the desired degree of tax progressivity for couples. Higher progressivity increases the employment of single women at the lower end of the income distribution. Under joint taxation of spouses, a decrease in progressivity leads to higher employment of married women.

Working language: English

Link: https://us02web.zoom.us/j/85295276934?pwd=Y3ZGMW1QdWV5VXRYYkdUUmJjcUF1dz09

ID: 852 9527 6934

Passport: 125923

Looking forward to see you.