Intergenerational Disagreement and Optimal Taxation of Parental Transfers

Nicola Pavoni and Hakki Yazici ()

The Review of Economic Studies, 2017, vol. 84, issue 3, 1264-1305

Abstract: We study optimal taxation of bequests and inter vivos transfers in a model where altruistic parents and their offspring disagree on intertemporal trade-offs. We show that the laissez-faire equilibrium is Pareto inefficient, and whenever offspring are impatient from their parents’ perspective, optimal policy involves a positive tax on parental transfers. Cautioned by the technical complications present in this class of models, our normative prescriptions do not rely on the assumption of differentiability of the agents’ policy functions.

Keywords: Parental transfer taxation; Intergenerational disagreement; Altruism; E21; H21; D91 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (10)

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Working Paper: Intergenerational Disagreement and Optimal Taxation of Parental Transfers (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:84:y:2017:i:3:p:1264-1305.

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