Estate Taxation, Entrepreneurship, and Wealth

Marco Cagetti and Mariacristina De Nardi

No 13160, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the effects of abolishing estate taxation in a quantitative and realistic framework that includes the key features that policy makers are worried about: business investment, borrowing constraints, estate transmission, and wealth inequality. We use our model to estimate effective estate taxation. We consider various tax instruments to reestablish fiscal balance when abolishing estate taxation. We find that abolishing estate taxation would not generate large increases in inequality, and would, in some cases, generate increases in aggregate output and capital accumulation. If, however, the resulting revenue shortfall were financed through increased income or consumption taxation, the immensely rich, and the old among those in particular, would experience a welfare gain, at the cost of welfare losses for the vast majority of the population.

JEL-codes: D31 E21 H2 (search for similar items in EconPapers)
Date: 2007-06
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pbe and nep-pub
Note: PE
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Citations: View citations in EconPapers (9)

Published as Marco Cagetti & Mariacristina De Nardi, 2009. "Estate Taxation, Entrepreneurship, and Wealth," American Economic Review, American Economic Association, vol. 99(1), pages 85-111, March.

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Related works:
Journal Article: Estate Taxation, Entrepreneurship, and Wealth (2009)
Working Paper: Estate taxation, entrepreneurship, and wealth (2007)
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