Why, how and when couples get married? Maybe love is a key determinant but
economic factors could also explain part of the decision to marry. Although the tax
system is not marriage neutral in France, it has not been found significant in determining
marriage decision. But in France, couples also have to decide how to get married.
Indeed, the pacs was created in 1999. It is a new legal form of union, more flexible
than marriage. As for the marriage, the tax system is not pacs-neutral. Married and
pacsed couples have to pool their income so they jointly pay taxes. The year they get
married or pacsed, couples benefit from the fact that they are considered as different
households by the tax administration leading to a large reduction of income taxes for
that year. I estimate the impact of taxation on the decision to contract a pacs. I
study the reform of taxation of pacsed couples in 2005 using difference in difference
method on aggregated data on the number of pacs contracted by court in France. I
find that taxation have two different effects on pacs decision. First it has an increasing
incentive impact: fiscal reasons did not motivate additional pacs right after the reform
but they motivated 16-20% of pacs contracted in 2009. Second, it changes when couples
contract a pacs: 5%-10% changed their pacs day to benefit from the reform
taxation. I don’t find any significant impact of taxation on the decision to break up a
pacs.