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Deathbed tax planning

Author

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  • Erixson, Oscar
  • Escobar, Sebastian

Abstract

We estimate the extent of inheritance tax avoidance among married decedents in Sweden. Following Kopczuk (2007), we compare estates of decedents who pass away from terminal illness and those of decedents who pass away suddenly, the assumption being that the onset of terminal illness triggers planning. Extending on Kopczuk (2007), we also use exogenous variation in the incentives for tax planning created by an inheritance tax repeal in Sweden, which allows us to account for factors related to illness that may affect the estate value but are unrelated to tax planning (e.g., increased medical expenditures and lost income). Unlike earlier studies, we find no evidence of end-of-life inheritance tax planning, suggesting that this was of little importance in the setting we study.

Suggested Citation

  • Erixson, Oscar & Escobar, Sebastian, 2020. "Deathbed tax planning," Journal of Public Economics, Elsevier, vol. 185(C).
  • Handle: RePEc:eee:pubeco:v:185:y:2020:i:c:s0047272720300347
    DOI: 10.1016/j.jpubeco.2020.104170
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    References listed on IDEAS

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    1. Wojciech Kopczuk, 2007. "Bequest and Tax Planning: Evidence from Estate Tax Returns," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1801-1854.
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    More about this item

    Keywords

    Tax avoidance; Tax reform; Terminal illness;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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