Optimal Taxation of Married Couples with Household Production

The literature suggests that the concern for economic efficiency calls for individual-based taxation of married couples with a higher rate on the pri-mary earner. This paper reconsiders the choice of tax unit in the Becker model of household production. Our aim is to study the robustness of previ-ous results to the modelling of time allocation. In addition, we analyze the interaction between the optimal income tax for couples and the chosen com-modity tax structure. In the absence of restrictions on the use of commodity taxes, efficient taxation requires joint taxation of the family. In the presence of restricted commodity taxation, the income tax should compensate for the erroneous commodity taxes. In this case, individual taxation is typically op-timal, but not necessarily with a higher rate on primary earners as usually suggested. (JEL H21, D13, J22