Estate Taxation with Altruism Heterogeneity

Emmanuel Farhi and Iván Werning

No 18792, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We 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, depending 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.

JEL-codes: H0 H2 H21 H23 H24 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-pub
Note: EFG PE
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Citations: View citations in EconPapers (27)

Published as Emmanuel Farhi & Iván Werning, 2013. "Estate Taxation with Altruism Heterogeneity," American Economic Review, American Economic Association, vol. 103(3), pages 489-95, May.

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Journal Article: Estate Taxation with Altruism Heterogeneity (2013)
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