Taxation of couples and families: budgetary and redistributive effects of income tax

This study focuses on the budgetary and redistributive effects of spousal and family taxation of income in France. Based on the Ines microsimulation model, it proposes a complete methodology for individualizing income and different tax systems for couples and families. It aims, in particular, to provide detailed information at the level of each percentile of the standard of living and according to the family configuration. This work incorporates recent legislative changes (lowering the family quotient cap, capping credits and tax cuts, changing the discount, abolishing PEP) and updating some of the results relating to the marital quotient (Amar and Guérin 2007, Eidelman 2013). By comparing spousal and family taxation in 2017 to a fictional situation where the tax would be individualized, the results seek to characterize the winners and losers of this conjugal and family taxation according to the standard of living, to calculate the masses. the effects on indicators of inequality and poverty. The results are obtained without posing behavioral hypotheses and with a non constant budgetary envelope.
The majority of conjugalization and familialization of income taxes are winners and the effects are massive: 13 million households are winners, for a total effect of 27.7 billion euros. 1.1 million households are also losers, mainly because of conjugalization, not caught up by gains in familialization. About 40% of the total effect is due to conjugalization and 60% to familialization. The average earnings of the winning households amount to € 2,120 per year and losers' losses to € 400. Because of the progressivity of the income tax, the 15% of the wealthiest people are those who benefit the most from the conjugalization: they receive 48% of the total gains while the 50% the most modest receive less than 25 % gains. The net effect of conjugalization increased between 2012 and 2017 as a result of tax reforms, which reduced losses and increased earnings to modest and median households.