Accidental bequests: a curse for the rich and a boon for the poor
Helmuth Cremer,
Firouz Gahvari and
Pierre Pestieau
No 09-119, TSE Working Papers from Toulouse School of Economics (TSE)
Abstract:
When accidental bequests signal otherwise unobservable individual characteristics such as productivity and longevity, the tax administration should partition the population into two groups: One consisting of people who do not receive an inheritance and the other of those who do. The first tagged group gets a second-best tax à la Mirrlees; the second group a first-best tax schedule. The solution implies that receiving an inheritance makes high-ability types worse off and low-ability types better off. High-ability individuals will necessarily face a bequest tax of more than 100%, while low-ability types face a bequest tax that can be smaller as well as larger than 100%. With a Rawlsian social welfare function, the low-ability types too face a more than 100% tax on bequests.
Keywords: Accidental bequests; estate tax; tagging; first best; second best (search for similar items in EconPapers)
JEL-codes: H21 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-pbe
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http://www.tse-fr.eu/sites/default/files/medias/doc/wp/pe/wp_pe_119_2009.pdf Full text (application/pdf)
Related works:
Journal Article: Accidental Bequests: A Curse for the Rich and a Boon for the Poor (2012) 
Working Paper: Accidental bequests: a curse for the rich and a boon for the poor (2012)
Working Paper: Accidental Bequests: A Curse for the Rich and a Boon for the Poor (2010) 
Working Paper: Accidental bequests: a curse for the rich and a boon for the poor (2009) 
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