IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

The vanishing bequest tax. The Comparative Evolution of Bequest Taxation in Historical Perspective

  • Graziella Bertocchi


Bequest tax revenues have been constantly declining in all OECD countries for at least seventy years. We propose an explanation which is based on a dynamic politico-economic model where the evolution of bequest taxation is determined by wealth inequality. Since economic development induces a growing role of labor income and thus a reduction of wealth inequality, bequest taxation is reduced over time. Our model also explains cross-country differences in the level and speed of adjustment of the tax, by embedding structural reallocation from agriculture to manufacturing and a consequent shift of the tax base from easy-to-tax land to hard-to-tax capital. This implies a lower tax level, and a slower equalization-induced tax reduction, the higher is the tax avoidance rate and the less developed is the economy. Finally, the introduction of franchise restrictions which are gradually lifted over time allows the model to reproduce the humped-shaped long-term evolution of bequest taxation starting from the nineteenth century for those countries that are now modern industrial democracies, and also helps to explain the discrepancies currently observed between tax systems in developed and underdeveloped countries.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by University of Modena and Reggio E., Dept. of Economics "Marco Biagi" in its series Center for Economic Research (RECent) with number 005.

in new window

Length: pages 32
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:mod:recent:005
Contact details of provider: Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Helmuth Cremer & Pierre Pestieau, 2003. "Wealth Transfer Taxation: A Survey," CESifo Working Paper Series 1061, CESifo Group Munich.
  2. Aizenman, Joshua & Jinjarak, Yothin, 2006. "Globalization and Developing Countries - a Shrinking Tax Base ?," Santa Cruz Department of Economics, Working Paper Series qt8r12k4xr, Department of Economics, UC Santa Cruz.
  3. Mariacristina De Nardi, 2002. "Wealth inequality and intergenerational links," Staff Report 314, Federal Reserve Bank of Minneapolis.
  4. Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
  5. Arie Kapteyn & Constantijn Panis, 2003. "The Size and Composition of Wealth Holdings in the United States, Italy, and the Netherlands," NBER Working Papers 10182, National Bureau of Economic Research, Inc.
  6. Alan Auerbach, 2006. "Why have Corporate Tax Revenues Declined? Another Look," CESifo Working Paper Series 1785, CESifo Group Munich.
  7. William Jack & Roger Lagunoff, 2003. "Dynamic Enfranchisement," Levine's Bibliography 666156000000000030, UCLA Department of Economics.
  8. Laitner, John, 2001. "Secular Changes in Wealth Inequality and Inheritance," Economic Journal, Royal Economic Society, vol. 111(474), pages 691-721, October.
  9. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881, July.
  10. Jess Benhabib & Alberto Bisin, 2006. "The distribution of wealth and redistributive policies," 2006 Meeting Papers 368, Society for Economic Dynamics.
  11. Roland Benabou, 2000. "Unequal Societies: Income Distribution and the Social Contract," American Economic Review, American Economic Association, vol. 90(1), pages 96-129, March.
  12. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  13. Marina Azzimonti & Eva de Francisco & Per Krusell, 2006. "Median-voter Equilibria in the Neoclassical Growth Model under Aggregation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 587-606, December.
  14. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May.
  15. Blumkin, Tomer & Sadka, Efraim, 2004. "Estate taxation with intended and accidental bequests," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 1-21, January.
  16. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2003. "The Survival of the Welfare State," American Economic Review, American Economic Association, vol. 93(1), pages 87-112, March.
  17. Saku Aura, 2004. "Estate and Capital Gains Taxation: Efficiency and Political Economy Considerations," Public Economics 0404011, EconWPA.
  18. Alan J. Auerbach & James M. Poterba, 1987. "Why Have Corporate Tax Revenues Declined?," NBER Working Papers 2118, National Bureau of Economic Research, Inc.
  19. Humberto Llavador & Robert Oxoby, 2003. "Partisan competition, growth and the franchise," Economics Working Papers 730, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2004.
  20. Jonathan Eaton, 1984. "A Dynamic Specific-Factors Model of International Trade," NBER Working Papers 1479, National Bureau of Economic Research, Inc.
  21. Lindert Peter H., 1994. "The Rise of Social Spending, 1880-1930," Explorations in Economic History, Elsevier, vol. 31(1), pages 1-37, January.
  22. Kotlikoff, Laurence J & Summers, Lawrence H, 1981. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 706-32, August.
  23. Das Satya P & Ghate Chetan, 2004. "Endogenous Distribution, Politics, and the Growth-Equity Tradeoff," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-32, July.
  24. Wojciech Kopczuk & Emmanuel Saez, 2004. "Top Wealth Shares in the United States: 1916-2000: Evidence from Estate Tax Returns," NBER Working Papers 10399, National Bureau of Economic Research, Inc.
  25. Graziella Bertocchi, 2006. "The Law of Primogeniture and the Transition from Landed Aristocracy to Industrial Democracy," Journal of Economic Growth, Springer, vol. 11(1), pages 43-70, 03.
  26. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2005. "Hobbes to Rousseau: Inequality, Institutions, and Development," IZA Discussion Papers 1450, Institute for the Study of Labor (IZA).
  27. Per Krusell & Jose-Victor Rios-Rull, 1997. "On the size of U.S. government: political economy in the neoclassical growth model," Staff Report 234, Federal Reserve Bank of Minneapolis.
  28. repec:tpr:qjecon:v:115:y:2000:i:4:p:1167-1199 is not listed on IDEAS
  29. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
  30. Bertocchi, Graziella & Spagat, Michael, 2001. "The Politics of Co-optation," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 591-607, December.
  31. E.H.P. Frankema, 2005. "The Colonial Origins of Inequality: Exploring the Causes and Consequences of Land Distribution," Ibero America Institute for Econ. Research (IAI) Discussion Papers 119, Ibero-America Institute for Economic Research.
  32. Acemoglu, Daron & Robinson, James A, 1998. "Why did the West Extend the Franchise? Democracy, Inequality and Growth in Historical Perspective," CEPR Discussion Papers 1797, C.E.P.R. Discussion Papers.
  33. Saint-Paul, Gilles & Verdier, Thierry, 1992. "Education, Democracy and Growth," CEPR Discussion Papers 613, C.E.P.R. Discussion Papers.
  34. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't the United States Have a European-Style Welfare State?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 187-278.
  35. Justman, Moshe & Gradstein, Mark, 1999. "The Industrial Revolution, Political Transition, and the Subsequent Decline in Inequality in 19th-Century Britain," Explorations in Economic History, Elsevier, vol. 36(2), pages 109-127, April.
  36. Thomas Piketty & Emmanuel Saez, 2007. "How progressive is the US federal tax system? A historical and international perspective," Post-Print halshs-00754244, HAL.
  37. repec:tpr:qjecon:v:125:y:2010:i:2:p:635-673 is not listed on IDEAS
  38. Christian Kleiber & Martin Sexauer & Klaus Wälde, 2006. "Bequests, Taxation and the Distribution of Wealth in a General Equilibrium Model," CESifo Working Paper Series 1723, CESifo Group Munich.
  39. Oded Galor & Omar Moav & Dietrich Vollrath, 2006. "Inequality in Land Ownership, the Emergence of Human Capital Promoting Institutions, and the Great Divergence," DEGIT Conference Papers c011_001, DEGIT, Dynamics, Economic Growth, and International Trade.
  40. Atkinson, Anthony B & Gordon, James P F & Harrison, Alan, 1989. "Trends in the Shares of Top Wealth-Holders in Britain, 1923-1981," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(3), pages 315-32, August.
  41. Aaron, Henry J. & Munnell, Alicia H., 1992. "Reassessing the Role for Wealth Transfer Taxes," National Tax Journal, National Tax Association, vol. 45(2), pages 119-43, June.
  42. Bertocchi, Graziella & Spagat, Michael, 1998. "The Evolution of Modern Educational Systems: Technical Vs. General Education, Distributional Conflict and Growth," CEPR Discussion Papers 1925, C.E.P.R. Discussion Papers.
  43. Javier Díaz-Giménez & Vincenzo Quadrini & José-Víctor Ríos-Rull, 1997. "Dimensions of inequality: facts on the U.S. distributions of earnings, income, and wealth," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-21.
  44. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  45. Wojciech Kopczuk, 2003. "The Trick Is to Live: Is the Estate Tax Social Security for the Rich?," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1318-1341, December.
  46. repec:tpr:qjecon:v:119:y:2004:i:2:p:705-763 is not listed on IDEAS
  47. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-22, May.
  48. Oded Galor & Omer Moav & Dietrich Vollrath, 2005. "Land Inequality and the Emergence of Human Capital Promoting Institutions," Development and Comp Systems 0502018, EconWPA.
  49. Burgess, Robin & Stern, Nicholas, 1993. "Taxation and Development," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 762-830, June.
  50. Wolff, Edward N, 1996. "International Comparisons of Wealth Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(4), pages 433-51, December.
  51. William G. Gale & Joel B. Slemrod, 2001. "Rethinking the Estate and Gift Tax: Overview," NBER Working Papers 8205, National Bureau of Economic Research, Inc.
  52. Emmanuel Farhi & Ivan Werning, 2006. "Progressive Estate Taxation," NBER Working Papers 12600, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mod:recent:005. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.