Optimum Taxation of Inheritances

Johann Brunner () and Susanne Pech ()

No CESifo Working Paper No. 2319, CESifo Working Paper Series from CESifo Group Munich

Abstract: We incorporate the fact that inheritances create a second distinguishing characteristic of individuals, in addition to earning abilities, into an optimum income taxation model with bequests motivated by joy of giving. We show that a tax on inheritances and a uniform tax on all expenditures including bequests are equivalent and that either is desirable, according to an intertemporal social objective, if on average high-able individuals have larger inherited endowments than low-able. We demonstrate that such a situation results as the outcome of a process with stochastic transition of abilities over generations, if all descendants are more probable to have their parent’s ability rank than any other.

JEL-codes: H21 H24 (search for similar items in EconPapers)
Date: 2008
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Related works:
Working Paper: Optimum taxation of inheritances (2008)
Working Paper: Optimum Taxation of Inheritance (2008)
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