Estate Taxation with Altruism Heterogeneity

Emmanuel Farhi and Iván Werning

American Economic Review, 2013, vol. 103, issue 3, 489-95

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. 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.

JEL-codes: D14 H21 H24 H31 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.3.489
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Citations: View citations in EconPapers (28)

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Working Paper: Estate Taxation with Altruism Heterogeneity (2013)
Working Paper: Estate Taxation with Altruism Heterogeneity
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