Inheritance taxation with agents differing in altruism

Pascal Belan, Erwan Moussault and Pascal.belan@u-Cergy.fr
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Pascal.belan@u-Cergy.fr: Université de Cergy-Pontoise, THEMA
Authors registered in the RePEc Author Service: Pascal Belan ()

No 2018-14, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We analyze a shift from capital income tax towards inheritance tax in a two-period overlapping generation model with rational altruism `a la Barro, where the population consists of two types of dynasties that differ in altruism. The tax reform is implemented in a way that leaves the capital-labor ratio unchanged in steady state. With inelastic labor supply, the tax reform increases welfare of the less altruistic dynasties, but decreases welfare of the most altruistic ones. We then extend the model introducing elastic labor supply and considering that the old can transfer time to their offspring in order to help them in their domestic tasks. In this context, the tax reform can enhance labor supply and increase aggregate resources for consumption of market goods. A shift from capital income tax towards inheritance tax can then be Pareto improving.

Keywords: altruism; bequests; time transfers; inheritance tax; redistribution. (search for similar items in EconPapers)
JEL-codes: D64 H22 J22 (search for similar items in EconPapers)
Date: 2018
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Related works:
Journal Article: Inheritance Taxation with Agents Differing in Altruism (2022)
Working Paper: Inheritance Taxation with Agents Differing in Altruism (2022)
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