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Inheritance taxation with agents differing in altruism and productivity

Author

Listed:
  • Pascal Belan
  • Erwan Moussault
  • pascal.belan@u-cergy.fr

    (Université de Cergy-Pontoise, THEMA)

Abstract

We analyze a shift from capital income tax towards inheritance tax in a two-period overlapping generation model with rational altruism a la Barro, where the population consists of two types of dynasties that di er in altruism and productivity. The tax reform is implemented in a way that leaves the capital-labor ratio constant at steady state. It increases welfare of less altruistic dynasties, but decreases welfare of the most altruistic one. We then extend the model by considering time transfers from the old to the young generation and assuming that the young have elastic labor supply. We discuss the condition for the tax reform to be Pareto-improving in steady state.

Suggested Citation

  • Pascal Belan & Erwan Moussault & pascal.belan@u-cergy.fr, 2018. "Inheritance taxation with agents differing in altruism and productivity," THEMA Working Papers 2018-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  • Handle: RePEc:ema:worpap:2018-14
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    More about this item

    Keywords

    altruism; bequests; heterogeneity; inheritance tax; redistribution.;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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