The Distributional Burden of Taxing Estates and Unrealized Capital Gains at the Time of Death
AbstractThe 1998 Survey of Consumer Finances provides information on household wealth ownership that can be used to estimate the effect of changing the Unified Estate and Gift Tax Credit on estate tax revenues. The survey also includes data on the prices at which assets were purchased, along with information on their market values. This makes it possible to compare the revenue yield and the distributional consequences of taxing estates with those of taxing unrealized capital gains on assets held by individuals who die. This paper uses data from the Survey of Consumer Finances to estimate the revenue effects of changes in both estate tax provisions and capital gains tax rules. It finds that among those with small estates ($1 million or less), taxing capital gains at death would collect more revenue than the current estate tax from roughly half of the decedents. For those with larger estates, replacing the estate tax with a tax on unrealized gains at death would result in a substantial reduction in total tax payments. The revenue estimates and distributional analyses assume no change in the current capital gains realization behavior of taxpayers, even if the tax law changes. This is an important limitation, and the paper notes several directions for further research that might help to relax this assumption.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7811.
Date of creation: Jul 2000
Date of revision:
Publication status: published as Gale, William G., James R. Hines, and Joel Slemrod (eds.) Rethinking Estate and Gift Taxation. Brookings Institution, 2001.
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Find related papers by JEL classification:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-07-27 (All new papers)
- NEP-PBE-2000-07-27 (Public Economics)
- NEP-POL-2000-07-27 (Positive Political Economics)
- NEP-PUB-2000-07-27 (Public Finance)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Comment on Murphy and Thaler
by ssumner in The Money Illusion on 2010-11-14 18:38:56
- Three Wrongs Don't Make a Right: Thaler on Estate Taxes
by David Friedman in Ideas on 2010-11-07 16:43:00
by himaginary in himaginaryの日記 on 2010-11-21 08:00:00
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- Poterba, James, 2001. "Estate and gift taxes and incentives for inter vivos giving in the US," Journal of Public Economics, Elsevier, vol. 79(1), pages 237-264, January.
- John Laitner, 2001. "Modeling the Macroeconomic Implications of Social Security Reform," Working Papers wp015, University of Michigan, Michigan Retirement Research Center.
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