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Premature Deaths, Accidental Bequests and Fairness

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Listed:
  • Marc Fleurbaey
  • Marie-Louise Leroux
  • Pierre Pestieau
  • Grégory Ponthière
  • Stéphane Zuber

Abstract

While little agreement exists regarding the taxation of bequests in general, there is a widely held view that accidental bequests should be subject to a confiscatory tax. We propose to reexamine the optimal taxation of accidental bequests in an economy where individuals care about what they leave to their offspring in case of premature death. We show that, whereas the conventional 100 % tax view holds under the standard utilitarian social welfare criterion, it does not hold under the ex post egalitarian criterion, which assigns a strong weight to the welfare of unlucky short-lived individuals. From an egalitarian perspective, it is optimal not to tax, but to subsidize accidental bequests. We examine the robustness of those results in a dynamic OLG model of wealth accumulation, and show that, whereas the sign of the optimal tax on accidental bequests depends on the form of the joy of giving motive, it remains true that the 100 % tax view does not hold under the ex post egalitarian criterion.

Suggested Citation

  • Marc Fleurbaey & Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière & Stéphane Zuber, 2017. "Premature Deaths, Accidental Bequests and Fairness," Cahiers de recherche 1704, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
  • Handle: RePEc:lvl:criacr:1704
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    References listed on IDEAS

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    Cited by:

    1. Marie‐Louise Leroux & Pierre Pestieau, 2022. "Age‐related taxation of bequests in the presence of a dependency risk," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(1), pages 92-119, February.
    2. Decerf, Benoit & Maniquet, François, 2021. "Fair inheritance taxation," LIDAM Discussion Papers CORE 2021011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Leroux, Marie-Louise & Pestieau, Pierre, 2021. "Age and health related inheritance taxation," LIDAM Discussion Papers CORE 2021002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Harun Onder & Pierre Pestieau & Grégory Ponthière, 2019. "Equivalent income versus equivalent lifetime: does the metric matter?," PSE Working Papers halshs-02187803, HAL.
    5. Johanna Etner & Natacha Raffin & Thomas Seegmuller, 2018. "Male Reproductive Health, Fairness and Optimal Policies," Working Papers halshs-01798983, HAL.
    6. Juan D. Moreno-Ternero & Lars P. Osterdal, 2022. "Entitlements to continued life and the evaluation of population health," Working Papers 22.08, Universidad Pablo de Olavide, Department of Economics.

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    More about this item

    Keywords

    mortality; accidental bequests; optimal taxation; egalitarianism; OLG models;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • 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
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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