The optimal income taxation of couples

Henrik Jacobsen Kleven, Claus Thustrup Kreiner, Emmanuel Saez

Research output: Contribution to journalArticlepeer-review

98 Scopus citations


This paper analyzes the general nonlinear optimal income tax for couples, a multidimensional screening problem. Each couple consists of a primary earner who always participates in the labor market, but makes an hours-of-work choice, and a secondary earner who chooses whether or not to work. If second-earner participation is a signal of the couple being better (worse) off, we prove that optimal tax schemes display a positive tax (subsidy) on secondary earnings and that the tax (subsidy) on secondary earnings decreases with primary earnings and converges to zero asymptotically. We present calibrated microsimulations for the United Kingdom showing that decreasing tax rates on secondary earnings is quantitatively significant and consistent with actual income tax and transfer programs.

Original languageEnglish (US)
Pages (from-to)537-560
Number of pages24
Issue number2
StatePublished - Mar 2009
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


  • Multidimensional screening
  • Optimal income tax


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