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Title:Accidental bequests: A curse for the rich and a boon for the poor PDF Logo
Authors:Cremer, Helmuth
Gahvari, Firouz
Pestieau, Pierre
Issue Date:2010
Series/Report no.:CESifo working paper Public Finance 3094
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% and may even be negative.
Subjects:accidental bequests
estate tax
tagging
first best
second best
JEL:H21
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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