Self-interest, stated preferences and the taxation of couples

A recent and growing literature studies policy preferences empirically using survey experiments. A frequent approach in welfare economics, cost-benefit-analysis and political economy is to aggregate policy preferences assuming rationality and self-interest. In this paper we compare the two approaches in a specific policy domain, the tax treatment of married couples. We explore whether political economy arguments can explain the persistence of joint taxation in Germany. First, we use a sufficient statistics approach rooted in utility-maximizing behavior. With this approach we estimate the population shares of winners and losers from a revenue-neutral reform towards individual taxation, according to material self-interest. Second, we report on a large scale survey experiment to elicit stated preferences among a representative sample of the German population. Both methods show that the tax treatment of couples in Germany is highly controversial. Based on material self-interest, the support for a reform towards individual taxation is slightly below the majority threshold. Since the race is so close, views on just taxation or on the status of marriage can actually make a difference. We find that, according to the preferences stated in the survey experiment, support for a reduction of marriage bonuses is lower than suggested by the analysis based on self-interest.