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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/38890
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| Title: | | Accidental bequests: A curse for the rich and a boon for the poor  |
| 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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