Age and health related inheritance taxation

Marie-Louise Leroux and Pierre Pestieau

No 2021002, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper studies the design of an optimal non linear inheritance taxation when individuals differ in wage as well as in their risks of both mortality and old-age dependance. We assume that the government cannot distinguish between bequests motives, that is whether bequests result from precautionary reasons or from pure joy of giving reasons. Instead, we assume that it only observes whether bequests are made early in life or late in life, and in the latter case, whether the donor is autonomous or not. The main result is that, under asymmetric information, in addition to labour income taxation, early bequests of the low-productivity agent should be distorted downward, that is, they should be taxed so as to relax incentive constraints.

Keywords: Bequest taxation; Long term care; Utilitarianism; Old-age dependency; Non linear taxation (search for similar items in EconPapers)
JEL-codes: H21 H23 I14 (search for similar items in EconPapers)
Pages: 10
Date: 2021-04-05
New Economics Papers: this item is included in nep-age, nep-hea and nep-pbe
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Related works:
Working Paper: Age and Health Related Inheritance Taxation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2021002

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