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Tax avoidance and intra-family transfers

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  • Nordblom, Katarina
  • Ohlsson, Henry

Abstract

To what extent do people avoid taxes on intra-family transfers (bequests and gifts), and how would integration (unification) of the different transfers taxes affect tax avoidance? These issues are important for families and their welfare, as well as for governments and their possibilities of raising revenue from transfer taxes. In this paper we study the effects of transfer taxes on altruistic parents' transfers to their children. Using a theoretical model we find that altruistic parents do not necessarily tax minimize. However, in some cases when they do, there is an infinitely large excess burden of a transfer tax. We also find that integration of transfer taxes reduces tax avoidance. All tax avoidance is eliminated with complete integration.
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  • Nordblom, Katarina & Ohlsson, Henry, 2006. "Tax avoidance and intra-family transfers," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1669-1680, September.
  • Handle: RePEc:eee:pubeco:v:90:y:2006:i:8-9:p:1669-1680
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    9. Helmuth Cremer & ) & Pierre Pestieau, 2003. "Wealth Transfer Taxation: A Survey," Public Economics 0311003, EconWPA.
    10. Nordblom, Katarina & Ohlsson, Henry, 2006. "Tax avoidance and intra-family transfers," Journal of Public Economics, Elsevier, pages 1669-1680.
    11. Page, Benjamin R., 2003. "Bequest taxes, inter vivos gifts, and the bequest motive," Journal of Public Economics, Elsevier, pages 1219-1229.
    12. Donald Cox, 1990. "Intergenerational Transfers and Liquidity Constraints," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 187-217.
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    16. Nordblom, Katarina, 2003. "Is increased public schooling really a policy for equality?: The role of within-the-family education," Journal of Public Economics, Elsevier, pages 1943-1965.
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    Cited by:

    1. Niimi, Yoko, 2016. "To Avoid or Not to Avoid Inheritance Taxes? That Is the Question for Parents: Empirical Evidence from Japan," AGI Working Paper Series 2016-13, Asian Growth Research Institute.
    2. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.
    3. Forslund, Anders & Gottfries, Nils & Westermark, Andreas, 2005. "Real and nominal wage adjustment in open economies," Working Paper Series 2005:23, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Elinder Mikael & Erixson Oscar & Ohlsson Henry, 2012. "The Impact of Inheritances on Heirs' Labor and Capital Income," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-37, December.
    5. Stefan Hochguertel & Henry Ohlsson, 2009. "Compensatory inter vivos gifts," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 993-1023.
    6. James R. Hines Jr., 2013. "The Redistributive Potential of Transfer Taxation," Public Finance Review, , vol. 41(6), pages 885-903, November.
    7. Per Engstrom & Bertil Holmlund, 2009. "Tax evasion and self-employment in a high-tax country: evidence from Sweden," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2419-2430.
    8. Marta Melguizo Garde, 2007. "La motivación de las transmisiones lucrativas entre generaciones de una familia: modelos teóricos y evidencia empírica," Hacienda Pública Española, IEF, vol. 181(2), pages 81-118, June.
    9. James R. Hines Jr., 2013. "How Important Are Perpetual Tax Savings?," Tax Policy and the Economy, University of Chicago Press, pages 101-124.
    10. Federico Belotti & Edoardo Di Porto & Gianluca Santoni, 2016. "The Effect of Local Taxes on Firm Performance: Evidence from Geo-referenced Data," CSEF Working Papers 430, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    11. repec:spr:jopoec:v:30:y:2017:i:4:d:10.1007_s00148-017-0651-2 is not listed on IDEAS
    12. Sommer, Eric, 2017. "Wealth Transfers and Tax Planning: Evidence for the German Bequest Tax," IZA Discussion Papers 11120, Institute for the Study of Labor (IZA).
    13. Nordblom, Katarina & Ohlsson, Henry, 2006. "Tax avoidance and intra-family transfers," Journal of Public Economics, Elsevier, pages 1669-1680.
    14. Jie Chen, 2006. "The Dynamics of Housing Allowance Claims in Sweden: A Discrete Time-Hazard Analysis," European Journal of Housing Policy, Taylor and Francis Journals, pages 1-29.
    15. Elinder Mikael & Erixson Oscar & Ohlsson Henry, 2012. "The Impact of Inheritances on Heirs' Labor and Capital Income," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-37.
    16. Erixson, Oscar, 2014. "Health responses to a wealth shock: Evidence from a Swedish tax reform," Working Paper Series, Center for Fiscal Studies 2014:3, Uppsala University, Department of Economics.
    17. Edoardo, Di Porto & Ohlsson, Henry, 2016. "Avoiding Taxes By Transfers Within The Family," Working Paper Series 2016:4, Uppsala University, Department of Economics.
    18. Norifumi Yukutake & Shinichiro Iwata & Takako Idee, 2011. "Strategic Interaction between Inter Vivos Gifts and Housing Acquisition," Global COE Hi-Stat Discussion Paper Series gd11-201, Institute of Economic Research, Hitotsubashi University.
    19. Katarina Nordblom & Henry Ohlsson, 2011. "Bequests, gifts, and education: links between intergenerational transfers," Empirical Economics, Springer, pages 343-358.
    20. Edwin S. Wong, 2013. "Gender preference and transfers from parents to children: an inter-regional comparison," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(1), pages 61-80, January.

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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