[en] This paper studies the role of family size in the design of optimal income taxation. We consider a second best setting where the government observes the number of children and the income of the parents but not their productivity. With a linear tax schedule the marginal tax rate is shown to decrease with the number of children, while the relationship between the demogrant and family size appears to be ambiguous. With two ability levels, optimal non-linear income tax implies zero marginal tax rates for the higher ability parents; low ability parents have positive marginal tax rates that decrease with family size.
Disciplines :
Human geography & demography
Author, co-author :
Cremer, Helmuth
Dellis, Arnaud
Pestieau, Pierre ; Université de Liège - ULiège > HEC - École de gestion de l'ULiège > Economie publique
Language :
English
Title :
Family size and optimal income taxation
Publication date :
February 2003
Journal title :
Journal of Population Economics
ISSN :
0933-1433
eISSN :
1432-1475
Publisher :
Springer Science & Business Media B.V., New York, United States - New York
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