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Optimal Estate Taxation: More (about) Heterogeneity across Dynasties

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  • Philipp Krug

Abstract

Standard models on optimal estate taxation do not allow for intergenerational transmission of bequest motives. However, correlation in bequest motives may exist due to genetic and cultural transmission of preferences or indirect reciprocity. I introduce such intergenerational correlation to a simple model with heterogeneously altruistic parents. I derive two insights for optimal linear estate taxation under a Utilitarian welfare measure. First, this correlation implies a higher optimal estate tax rate. Second, estate tax rates should be higher for those parents who inherited themselves.

Suggested Citation

  • Philipp Krug, 2022. "Optimal Estate Taxation: More (about) Heterogeneity across Dynasties," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 78(4), pages 470-487.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2022-0010
    DOI: 10.1628/fa-2022-0010
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    More about this item

    Keywords

    estate taxation; inheritance taxation; indirect reciprocity; intergenerational preference transmission; estatetaxation; inheritancetaxation; indirectreciprocity; intergenerationalpreferencetransmission;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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