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Bequest taxes, donations, and house prices

Author

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  • Bellettini Giorgio

    (University of Bologna, Bologna, Italy)

  • Taddei Filippo

    (SAIS – The Johns Hopkins University, Bologna, Italy and Collegio Carlo Alberto, Turin, Italy)

  • Zanella Giulio

    (University of Bologna, Bologna, Italy)

Abstract

This paper is an empirical investigation into the effect of bequest taxes (estate or inheritance tax, in the US) and inter vivos real estate donations taxes (gift tax, in the US) on (i) house prices, (ii) house donations, and (iii) market transactions. In a simple model with intergenerational altruism, a lower tax rate unambiguously increases (i) and has an ambiguous effect on (ii) and (iii). We test these predictions using an original and unique data set containing information on sales, donations and real estate prices in 13 large Italian cities between 1993 and 2004. This period spans a major reform that first decreased and then abolished the inter vivos real estate donations tax and bequest tax in Italy. We find that the reform is associated with cumulative real appreciation of about 5% between 2001 and 2004, an increase in donations, and a decrease in market transactions over the same period.

Suggested Citation

  • Bellettini Giorgio & Taddei Filippo & Zanella Giulio, 2013. "Bequest taxes, donations, and house prices," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 355-379, October.
    • Handle: RePEc:bpj:bejmac:v:13:y:2013:i:1:p:25:n:10
    DOI: 10.1515/bejm-2012-0069
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    References listed on IDEAS

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    Cited by:

    1. Bellettini, Giorgio & Taddei, Filippo & Zanella, Giulio, 2017. "Intergenerational altruism and house prices: Evidence from bequest tax reforms in Italy," European Economic Review, Elsevier, vol. 92(C), pages 1-12.
    2. Wei Han & Ping Wang & Hongjie Dong, 2020. "Influence of Egoistic and Altruistic Bequest Motives on the Willingness to Participate in Reverse Mortgages in China," Asian Economic Journal, East Asian Economic Association, vol. 34(4), pages 430-463, December.

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    More about this item

    Keywords

    bequests; donations; estate tax; gift tax; house prices; inheritance tax; JEL codes: E60; E65; H24;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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