Fair Inheritance Taxation
This paper studies the optimal taxation of bequests in a model in which agents have heterogeneous preferences over their consumption and the net-of-tax bequest received by their heir. The bequest left by an individual depends on both her degree of...
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| Format: | Working Paper |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/977991634065405485/Fair-Inheritance-Taxation http://hdl.handle.net/10986/36390 |
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okr-10986-363902021-10-15T05:10:34Z Fair Inheritance Taxation Decerf, Benoit Maniquet, François INHERITANCE TAX TAXATION TAX EXEMPTION COMPENSATION RESPONSIBILITY FAIRNESS This paper studies the optimal taxation of bequests in a model in which agents have heterogeneous preferences over their consumption and the net-of-tax bequest received by their heir. The bequest left by an individual depends on both her degree of altruism and the bequest received from her parents. First, the paper studies two principles that are at the heart of the debates on taxing inheritances: (1) children should not be penalized by the lack of altruism of their parents, and (2) parents should be free to choose their bequests. Only one social welfare function satisfies these two principles, together with Pareto efficiency and a separability principle. Second, the paper studies the shape of the inheritance tax scheme that maximizes this social welfare function. It shows that in the aggregate, the inheritance tax must collect money (redistributed through a non-negative demogrant). Moreover, small bequests cannot be taxed (they can potentially be subsidized), while bequests that are larger than those of the most altruistic individuals who did not receive bequests from their parents should be taxed as much as efficiency permits. 2021-10-14T14:12:29Z 2021-10-14T14:12:29Z 2021-10 Working Paper http://documents.worldbank.org/curated/undefined/977991634065405485/Fair-Inheritance-Taxation http://hdl.handle.net/10986/36390 English Policy Research Working Paper;No. 9804 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
INHERITANCE TAX TAXATION TAX EXEMPTION COMPENSATION RESPONSIBILITY FAIRNESS |
| spellingShingle |
INHERITANCE TAX TAXATION TAX EXEMPTION COMPENSATION RESPONSIBILITY FAIRNESS Decerf, Benoit Maniquet, François Fair Inheritance Taxation |
| relation |
Policy Research Working Paper;No. 9804 |
| description |
This paper studies the optimal
taxation of bequests in a model in which agents have
heterogeneous preferences over their consumption and the
net-of-tax bequest received by their heir. The bequest left
by an individual depends on both her degree of altruism and
the bequest received from her parents. First, the paper
studies two principles that are at the heart of the debates
on taxing inheritances: (1) children should not be penalized
by the lack of altruism of their parents, and (2) parents
should be free to choose their bequests. Only one social
welfare function satisfies these two principles, together
with Pareto efficiency and a separability principle. Second,
the paper studies the shape of the inheritance tax scheme
that maximizes this social welfare function. It shows that
in the aggregate, the inheritance tax must collect money
(redistributed through a non-negative demogrant). Moreover,
small bequests cannot be taxed (they can potentially be
subsidized), while bequests that are larger than those of
the most altruistic individuals who did not receive bequests
from their parents should be taxed as much as efficiency permits. |
| format |
Working Paper |
| author |
Decerf, Benoit Maniquet, François |
| author_facet |
Decerf, Benoit Maniquet, François |
| author_sort |
Decerf, Benoit |
| title |
Fair Inheritance Taxation |
| title_short |
Fair Inheritance Taxation |
| title_full |
Fair Inheritance Taxation |
| title_fullStr |
Fair Inheritance Taxation |
| title_full_unstemmed |
Fair Inheritance Taxation |
| title_sort |
fair inheritance taxation |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/undefined/977991634065405485/Fair-Inheritance-Taxation http://hdl.handle.net/10986/36390 |
| _version_ |
1764485144786239488 |