Alternative Tax Treatments of the Family: Simulation Methodology and Results

61 Pages Posted: 21 Mar 2001 Last revised: 13 May 2021

See all articles by Daniel R. Feenberg

Daniel R. Feenberg

National Bureau of Economic Research (NBER)

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 1980

Abstract

A number of suggestions have been made to reform the tax treatment of the family. None of these proposals has been accompanied by careful estimates of their effects on the income distribution, revenue collections, and labor supply. The purpose of this paper is to provide such information. Our analysis is based upon a series of simulations using the TAXSIM file of the National 3ureau of Economic Research, which contains information from a sample of tax returns filed in 1974. Substantial attention is devoted to the problem of imputing data that are absent from TAXSIM. The simulations assume that wives' labor supply behavior depends upon the tax system. The tax reforms simulated include various exemptions and credits for secondary workers, as well as changes in the rules governing filing status. In a number of cases we find that allowing for even a modest behavioral response leads to substantial changes in the revenue implications of the proposals.

Suggested Citation

Feenberg, Daniel R. and Rosen, Harvey S., Alternative Tax Treatments of the Family: Simulation Methodology and Results (July 1980). NBER Working Paper No. w0497, Available at SSRN: https://ssrn.com/abstract=263379

Daniel R. Feenberg (Contact Author)

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Harvey S. Rosen

Princeton University - Department of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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