Income Taxation of Couples and the Tax Unit Choice

This paper studies the optimal non linear income tax of couples. We build a general unitary model of labor supply and allow multidimensional heterogeneity in a discrete type framework. We concentrate our analysis on the resulting intra-family labor allocation of labor supplies and show that this analysis is strongly related to the choice of the tax unit (individual versus joint taxation). We give a necessary condition to have fully joint taxation in this framework and discuss some examples.