Estate Taxation with Altruism Heterogeneity
We develop a theory of optimal estate taxation in a model where bequest inequality is driven by differences in parental altruism. We show that a wide range of results are possible, from positive taxes to subsidies, depending on redistributive objectives implicit in the cardinal specification of utility and social welfare functions. We propose a normalization that is helpful in classifying these different possibilities. We isolate cases where the optimal policy bans negative bequests and taxes positive bequests, features present in most advanced countries.
Published: Emmanuel Farhi & IvÃ¡n Werning, 2013. "Estate Taxation with Altruism Heterogeneity," American Economic Review, American Economic Association, vol. 103(3), pages 489-95, May.
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