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Optimum taxation of bequests in a model with initial wealth

Johann Brunner () and Susanne Pech ()

No 2010-01, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: We formulate an optimum-taxation model, where parents leave bequests to their descendants for altruistic reasons. In contrast to the standard model, individuals differ not only in earning abilities, but also in initial (inherited) wealth. In this model a redistributive motive for an inheritance tax - which is equivalent to a uniform tax on all expenditures - arises, given that initial wealth increases with earning abilities. Its introduction increases intertemporal social welfare or has an ambiguous effect, depending on whether the bequeathing generation can adjust their behaviour and whether the external effect related to altruism is accounted for in the social objective.

Keywords: Optimum taxation; taxation of bequests (search for similar items in EconPapers)
JEL-codes: H21 H24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc and nep-pub
Date: 2010-01
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Related works:
Journal Article: Optimal Taxation of Bequests in a Model with Initial Wealth (2012) Downloads
Working Paper: Optimum taxation of bequests in a model with initial wealth (2010) Downloads
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