Estate Taxation, Entrepreneurship, and Wealth

Marco Cagetti and Mariacristina De Nardi

American Economic Review, 2009, vol. 99, issue 1, 85-111

Abstract: This paper studies the estate tax in a quantitative framework with business investment, borrowing constraints, estate transmission, and wealth inequality. We find that the estate tax has little effect on the saving and investment decisions of small businesses, but does distort the decisions of larger firms, thereby reducing aggregate output and savings. Removing such distortions by eliminating the estate tax does not necessarily imply that everyone would be better off. If other taxes were raised to reestablish fiscal balance, those at the top of the wealth distribution would experience a large welfare gain, but most of the population would lose. (JEL D31, E21, H22)

JEL-codes: D31 E21 H20 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/aer.99.1.85
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Citations: View citations in EconPapers (90)

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