Pareto-improving bequest taxation

Volker Grossman and Panu Poutvaara
Authors registered in the RePEc Author Service: Volker Grossmann

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: Altruistic parents may transfer resources to their offspring by providing education, and by leaving bequests. We show that in the presence of wage taxation, a small bequest tax may improve efficiency in an overlapping-generations framework with only intended bequests, by enhancing incentives of parents to invest in their children’s education. We also calculate an optimal mix of wage and bequest taxes with alternative parameter combinations. In all cases, the optimal wage tax rate is clearly higher than the optimal bequest tax rate, but the latter is generally positive when the required government revenue in the economy is sufficiently high. If educational investment is partly unobservable for the government, these results qualitatively hold also when allowing for education subsidies.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Published in International Tax and Public Finance 5 16(2009): pp. 647-669

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Pareto-improving bequest taxation (2009)
Working Paper: Pareto-Improving Bequest Taxation (2006)
Working Paper: Pareto-Improving Bequest Taxation (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:20438

Access Statistics for this paper

More papers in Munich Reprints in Economics from University of Munich, Department of Economics Ludwigstr. 28, 80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Tamilla Benkelberg (tamilla.benkelberg@econ.lmu.de).