Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73635
Authors: 
Brunner, Johann K.
Pech, Susanne
Year of Publication: 
2011
Series/Report no.: 
Working Paper, Department of Economics, Johannes Kepler University of Linz 1112
Abstract: 
Inherited wealth creates a second distinguishing characteristic of individuals, in addition to earning abilities. We incorporate this fact into a model of optimal labor income taxation, with bequests motivated by joy of giving. We find that taxes on bequests or on inheritances allow further redistribution, if in the parent generation initial wealth and earning abilities are positively related. On the other hand, these taxes distort the bequest decision; thus, the overall effect on social welfare is ambiguous. A tax on all expenditures of a generation (a uniform tax on consumption plus bequests) has the same redistributive effect as an inheritance tax but does not distort the bequest decision.
Subjects: 
optimal taxation
inheritance tax
expenditure tax
intergenerational wealth transfer
JEL: 
H21
H24
Document Type: 
Working Paper

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