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Optimum taxation of inheritances

Johann Brunner () and Susanne Pech ()

No 2008-06, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: We incorporate the fact that inheritances create a second distinguishing characteristic of individuals, in addition to earning abilities, into an optimum income taxation model with bequests motivated by joy of giving. We show that a tax on inheritances and a uniform tax on all expenditures including bequests are equivalent and that either is desirable, according to an intertemporal social objective, if on average high-able individuals have larger inherited endowments than low-able. We demonstrate that such a situation results as the outcome of a process with stochastic transition of abilities over generations, if all descendants are more probable to have their parent’s ability rank than any other.

Keywords: inheritance; tax (search for similar items in EconPapers)
JEL-codes: H21 H24 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
References: Add references at CitEc
Citations: View citations in EconPapers (10)

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http://www.econ.jku.at/papers/2008/wp0806.pdf (application/pdf)

Related works:
Working Paper: Optimum Taxation of Inheritances (2008) Downloads
Working Paper: Optimum Taxation of Inheritance (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2008_06

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