Does past experience affect future behavior? Evidence from estate tax avoidance behavior

Unlike most other taxes that are levied on most individuals or corporations, the estate tax is levied on a small number of very large estates. This divides taxpayers sharply into two groups—those who have experience of having paid it before and those who don’t. Given the nature and the rate of the estate tax, the experience of having paid it is probably neither negligible nor forgettable. In this paper, using data from the Survey of Consumer Finances and a regression discontinuity design, I find evidence that the experience of paying the estate tax in the past increases the probability that the individual is currently engaged in estate tax avoidance behavior for their children. I also find that the experience has an impact on the probability (extensive margin), but not on the amount (intensive margin).