TY  - JOUR
AU  - Farhi,Emmanuel
AU  - Werning,Iván
TI  - Estate Taxation with Altruism Heterogeneity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18792
PY  - 2013
Y2  - February 2013
UR  - http://www.nber.org/papers/w18792
L1  - http://www.nber.org/papers/w18792.pdf
N1  - Author contact info:
Emmanuel Farhi
Harvard University
Department of Economics
Littauer Center
Cambridge, MA 02138
Tel: 617/496-1835
Fax: 617/495-8570
E-Mail: efarhi@harvard.edu

Ivan Werning
MIT Department of Economics
50 Memorial Drive, E51-251a
Cambridge, MA 02142-1347
Tel: 617/452-3662
Fax: 617/253-1330
E-Mail: iwerning@mit.edu
AB  - 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.
ER  -