Estate Taxation with Altruism Heterogeneity
- (pp. 489-95)
AbstractWe develop a theory of optimal estate taxation in a model where bequest inequality is driven by differences in parental altruism. We show that a wide range of results are possible, from positive taxes to subsidies. The results depend on redistributive objectives implicit in the cardinal specification of utility and social welfare functions. We propose a normalization that is helpful in classifying these different possibilities. We isolate cases where the optimal policy bans negative bequests and taxes positive bequests, features present in most advanced countries.
CitationFarhi, Emmanuel, and Iván Werning. 2013. "Estate Taxation with Altruism Heterogeneity." American Economic Review, 103 (3): 489-95. DOI: 10.1257/aer.103.3.489
- D14 Personal Finance
- H21 Taxation and Subsidies: Efficiency; Optimal Taxation
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H31 Fiscal Policies and Behavior of Economic Agents: Household