Till Taxes Keep Us Apart? The Impact of the Marriage Tax on the Marriage Rate

Myohl, Nadia

doi:10.2139/ssrn.4118081

Cited by 1 publication

(2 citation statements)

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“…Most of these studies concern the USA, where it has been found that the income tax penalizes marriage decisions and increases the divorce rate (Alm and Whittington 1995a, b, 1997, 1999, 2003; Fisher, 2013), also affecting the timing of marriage decisions by delaying them (Alm and Whittington 1995a, 1997; Sjoquist and Walker 1995). Recent empirical evidence provided by Myohl (2022) for Switzerland shows that the joint income tax reduces the probability of a couple being married by 10.6%. Fink (2020) finds for Germany that the income tax code generates benefits for couples that get married earlier.…”

Section: Introductionmentioning

confidence: 99%

“…These expected gains may be changed by economic factors like the tax treatment of married couples and single individuals (Bargain et al ., 2022; Ilin et al ., 2022). Marriage decisions may in fact be affected by the so-called “marriage tax”, which takes the form of a “marriage subsidy” or a “marriage penalty”, depending on whether the couple pays less or more tax, respectively, when it is married than when it is separated (Myohl, 2022).…”

Section: Introductionmentioning

confidence: 99%

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Property tax incentives to divorce strategically

Santolini

2023

JES

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PurposeThe paper aims to examine the role played by property tax in influencing strategic decisions regarding marital separation and divorce in Italian municipalities.Design/methodology/approachThe empirical analysis is conducted on a sample of 6,458 Italian municipalities by applying the ordinary least squares (OLS) and instrumental variables (IVs) approaches.FindingsThe estimation results show a small increase in marital separations and divorces as the difference between the municipal secondary and primary home tax rate increases. Specifically, an increase of 1‰ in the property tax rate differentials is accompanied by an increase of six marital separations and four divorces per 1,000 inhabitants.Research limitations/implicationsThe main limitation of the analysis is that the strategic behavior of the married couple is inferred from econometric analysis with data aggregated at the municipal level. To investigate this phenomenon more precisely, it would be useful to have individual data collected by surveys on strategic divorce decisions due to property tax incentives.Originality/valueThis study contributes to the scant existing literature on the tax incentives for strategic divorce. It is the first study to empirically investigate the effects of property tax on separation and divorce decisions by investigating the Italian context. In Italy, a property tax was introduced in 1993, encouraging “false” divorces by spouses with a second home since the tax on the secondary home was set at a rate higher than that on the primary residence. Moreover, there were no tax deductions and no additional tax breaks on the secondary home, while they were established on the primary one. Higher property taxes and the absence of tax breaks on the secondary home may have encouraged a strategic behavior whereby many married couples filed for false separation and divorce in order to recover part of property tax rebates.

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