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Dying to Save Taxes: Evidence from Estate-Tax Returns on the Death Elasticity

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  • Wojciech Kopczuk

    (University of British Columbia)

  • Joel Slemrod

    (University of Michigan)

Abstract

This paper examines data from U.S. federal tax returns to shed light on whether the timing of death is responsive to its tax consequences. We investigate the temporal pattern of deaths around the time of changes in the estate-tax system periods when living longer, or dying sooner, could significantly affect estate-tax liability. We find some evidence that there is a small death elasticity, although we cannot rule out that what we have uncovered is ex post doctoring of the reported date of death. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Wojciech Kopczuk & Joel Slemrod, 2003. "Dying to Save Taxes: Evidence from Estate-Tax Returns on the Death Elasticity," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 256-265, May.
  • Handle: RePEc:tpr:restat:v:85:y:2003:i:2:p:256-265
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    References listed on IDEAS

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    1. William G. Gale & Joel B. Slemrod, 2001. "Rethinking the Estate and Gift Tax: Overview," NBER Working Papers 8205, National Bureau of Economic Research, Inc.
    2. Scholes, Ms & Wilson, Gp & Wolfson, Ma, 1992. "Firms Responses To Anticipated Reductions In Tax Rates - The Tax-Reform Act Of 1986," Journal of Accounting Research, Wiley Blackwell, vol. 30, pages 161-185.
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    6. Stacy Dickert-Conlin & Amitabh Chandra, 1999. "Taxes and the Timing of Birth," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 161-177, February.
    7. Alm, James & Whittington, Leslie A., 1995. "Does the Income Tax Affect Marital Decisions?," National Tax Journal, National Tax Association, vol. 48(4), pages 565-72, December.
    8. Sjoquist, David L. & Walker, Mary Beth, 1995. "The Marriage Tax and the Rate and Timing of Marriage," National Tax Journal, National Tax Association, vol. 48(4), pages 547-58, December.
    9. Sjoquist, David L. & Walker, Mary Beth, 1995. "The Marriage Tax and the Rate and Timing of Marriage," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(4), pages 547-558, December.
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    Cited by:

    1. Bernheim, B. Douglas & Lemke, Robert J. & Scholz, John Karl, 2004. "Do estate and gift taxes affect the timing of private transfers?," Journal of Public Economics, Elsevier, vol. 88(12), pages 2617-2634, December.
    2. Joshua Gans & Andrew Leigh, 2009. "The millennium bub," Applied Economics Letters, Taylor & Francis Journals, vol. 16(14), pages 1467-1470.
    3. Mizuta, Takeshi & Shimizu, Chihiro & Uesugi, Iichiro, 2016. "How Inheritance Affects the Real Estate Market in an Aging Economy : Evidence from Transaction and Registry Data," HIT-REFINED Working Paper Series 62, Institute of Economic Research, Hitotsubashi University.
    4. José Mª Durán Cabré & Alejandro Esteller Moré, 2007. "An empirical analysis of wealth taxation: Equity Vs.tax compliance," Working Papers XREAP2007-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2007.
    5. Michael Neugart & Henry Ohlsson, 2013. "Economic incentives and the timing of births: evidence from the German parental benefit reform of 2007," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(1), pages 87-108, January.
    6. Mauro Baranzini, 2005. "Modigliani's life-cycle theory of savings fifty years later," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 109-172.
    7. Eliason, M. & Ohlsson, H., 2013. "Timing of death and the repeal of the Swedish inheritance tax," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 113-123.
    8. Beatrice Brunner & Andreas Kuhn, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns’ Health: Evidence from the Abolition of Austria’s Baby Bonus," NRN working papers 2011-16, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    9. Mizuta, Takeshi & Shimizu, Chihiro & Uesugi, Iichiro, 2016. "How Inheritance Affects the Real Estate Market in an Aging Economy: Evidence from Transaction and Registry Data," RCESR Discussion Paper Series DP16-3, Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University.
    10. Gans Joshua S & Leigh Andrew, 2006. "Did the Death of Australian Inheritance Taxes Affect Deaths?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-9, November.
    11. Beatrice Brunner & Andreas Kuhn, 2014. "Announcement effects of health policy reforms: evidence from the abolition of Austria’s baby bonus," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 373-388, May.
    12. Schulkind, Lisa & Shapiro, Teny Maghakian, 2014. "What a difference a day makes: Quantifying the effects of birth timing manipulation on infant health," Journal of Health Economics, Elsevier, vol. 33(C), pages 139-158.
    13. Eliason, Marcus & Ohlsson, Henry, 2008. "Living to save taxes," Economics Letters, Elsevier, vol. 100(3), pages 340-343, September.
    14. Gans, Joshua S. & Leigh, Andrew, 2009. "Born on the first of July: An (un)natural experiment in birth timing," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 246-263, February.
    15. Evans, William N. & Moore, Timothy J., 2011. "The short-term mortality consequences of income receipt," Journal of Public Economics, Elsevier, vol. 95(11), pages 1410-1424.
    16. William G. Gale & Joel B. Slemrod, 2001. "Rethinking the Estate and Gift Tax: Overview," NBER Working Papers 8205, National Bureau of Economic Research, Inc.
    17. Markus Diller & Maximilian Kittl, 2016. "A little less waiting, a little more action? Inheritance tax planning under lifespan uncertainty," Journal of Business Economics, Springer, vol. 86(9), pages 963-995, December.
    18. Sara LaLumia & James M. Sallee & Nicholas Turner, 2015. "New Evidence on Taxes and the Timing of Birth," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 258-293, May.
    19. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2002. "The Importance of Bequests and Life-Cycle Saving in Capital Accumulation: A New Answer," American Economic Review, American Economic Association, vol. 92(2), pages 274-278, May.
    20. Beatrice Brunner & Andreas Kuhn, 2011. "Financial incentives, the timing of births, birth complications, and newborns' health: Evidence from the abolition of Austria's baby bonus," ECON - Working Papers 048, Department of Economics - University of Zurich.
    21. Mauro Baranzini, 2005. "Modigliani's life-cycle theory of savings fifty years later," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 109-172.
    22. Dale R. DeBoer & Edward C. Hoang, 2017. "Inheritances and Bequest Planning: Evidence from the Survey of Consumer Finances," Journal of Family and Economic Issues, Springer, vol. 38(1), pages 45-56, March.
    23. Brunner, Beatrice & Kuhn, Andreas, 2011. "Financial Incentives, the Timing of Births, Birth Complications, and Newborns' Health: Evidence from the Abolition of Austria's Baby Bonus," IZA Discussion Papers 6141, Institute for the Study of Labor (IZA).
    24. repec:eee:regeco:v:70:y:2018:i:c:p:360-372 is not listed on IDEAS
    25. Kei Sakata & Colin. R. McKenzie, 2010. "Does Taxation Affect Marriage and Family Planning Decisions?," Keio/Kyoto Joint Global COE Discussion Paper Series 2010-003, Keio/Kyoto Joint Global COE Program.

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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