Incentive Effects of Inheritances and Optimal Estate Taxation
AbstractI consider nonlinear taxation of income and bequests with a joy-of-giving bequest motive and explicitly characterize the estate tax rate structure that maximizes social planner's welfare function. The solution 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 in this context rests on the strength of the effect of bequests on behavior of future generations, and suggests that inheritance rather than estate tax is better suited to implement the corresponding policy.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18747.
Date of creation: Feb 2013
Date of revision:
Publication status: published as Wojciech Kopczuk, 2013. "Incentive Effects of Inheritances and Optimal Estate Taxation," American Economic Review, American Economic Association, vol. 103(3), pages 472-77, May.
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Other versions of this item:
- Wojciech Kopczuk, 2013. "Incentive Effects of Inheritances and Optimal Estate Taxation," American Economic Review, American Economic Association, vol. 103(3), pages 472-77, May.
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-02-08 (Accounting & Auditing)
- NEP-ALL-2013-02-08 (All new papers)
- NEP-MAC-2013-02-08 (Macroeconomics)
- NEP-PBE-2013-02-08 (Public Economics)
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, 2003.
"The Trick Is to Live: Is the Estate Tax Social Security for the Rich?,"
Journal of Political Economy,
University of Chicago Press, vol. 111(6), pages 1318-1341, December.
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Economics working papers
2013-15, Department of Economics, Johannes Kepler University Linz, Austria.
- Johann K. Brunner & Susanne Pech, 2013. "Taxing Bequests and Consumption in the Steady State," CESifo Working Paper Series 4453, CESifo Group Munich.
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