Incentive Effects of Inheritances and Optimal Estate Taxation
AbstractI consider optimal nonlinear taxation of income and bequests with a joy-of-giving bequest motive and explicitly characterize the optimal estate tax rate. The optimal formula trades off correction of externality from giving and discouraging effort of children due to income effect generated by bequests. The analysis shows that optimality of a positive tax on bequests rests on the strength of the effect of bequests on behavior of future generations. The analysis also suggests that inheritance, rather than estate tax, is better suited to implement the optimal policy.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 103 (2013)
Issue (Month): 3 (May)
Other versions of this item:
- Wojciech Kopczuk, 2013. "Incentive Effects of Inheritances and Optimal Estate Taxation," NBER Working Papers 18747, National Bureau of Economic Research, Inc.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wojciech Kopczuk, 2002.
"The Trick is to Live: Is the Estate Tax Social Security for the Rich?,"
NBER Working Papers
9188, National Bureau of Economic Research, Inc.
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- Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.
- Saez, Emmanuel, 2002.
"The desirability of commodity taxation under non-linear income taxation and heterogeneous tastes,"
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Elsevier, vol. 83(2), pages 217-230, February.
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- Johann K. Brunner & Susanne Pech, 2013.
"Taxing Bequests and Consumption in the Steady State,"
CESifo Working Paper Series
4453, CESifo Group Munich.
- Johann Brunner & Susanne Pech, 2013. "Taxing bequests and consumption in the steady state," Economics working papers 2013-15, Department of Economics, Johannes Kepler University Linz, Austria.
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