Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18979
Authors: 
Grossmann, Volker
Poutvaara, Panu
Year of Publication: 
2005
Series/Report no.: 
CESifo Working Paper 1515
Abstract: 
Altruistic parents may transfer resources to their offspring by providing education, and by leaving bequests. We show that in the presence of wage taxation, a small bequest tax may improve efficiency in an overlapping-generations framework with only intended bequests, by enhancing incentives of parents to invest in their children's education. This result holds even if the wage tax rate is held constant when introducing bequest taxation. We also calculate an optimal mix of wage and bequest taxes with alternative parameter combinations. In all cases, the optimal wage tax rate is clearly higher than the optimal bequest tax rate, but the latter is generally positive when the required government revenue in the economy is sufficiently high.
Subjects: 
bequest taxation
bequests
education
Pareto improvement
JEL: 
H31
I21
H21
D64
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.