dependency; inheritance taxation; optimal income taxation
Abstract :
[en] This paper studies the properties of the optimal taxes on bequests when individuals differ in wage and in their risks of mortality and old-age dependance. Survival is positively correlated to income but dependency is negatively correlated with it. The government cannot distinguish between bequests motives, that is whether bequests resulted from precautionary reasons or from pure joy of giving reasons. Instead, it observes the timing of bequests and the health status at death. Under the utilitarian social welfare criterion, we show that bequests taxation results from a combination of equity, insurance, and public revenue motives. If redistribution concerns dominate insurance concerns, it is desirable to tax the most bequests of those individuals living long in good health and to tax the least bequests of those dying early. This is a direct consequence of the socio-demographic structure we assumed where richer agents live longer and in better health than poorer agents. To the opposite, if insurance concerns dominate redistributive concerns, early bequests should be the most taxed and, bequests under dependency the least taxed. Under the Rawlsian criterion, we find that early bequests should be the least taxed and bequests left by the healthy long-lived individuals should be the most taxed.
Disciplines :
Economic systems & public economics
Author, co-author :
Leroux, Marie-Louise
Pestieau, Pierre ; Université de Liège - ULiège > HEC Liège > HEC Liège
Language :
English
Title :
Age-related taxation of bequests in the presence of a dependency risk
scite shows how a scientific paper has been cited by providing the context of the citation, a classification describing whether it supports, mentions, or contrasts the cited claim, and a label indicating in which section the citation was made.
Bibliography
Atkinson, A., & Stiglitz, J. (1980). Lectures on public economics. New York: McGraw-Hill.
Blumkin, T., & Sadka, E. (2003). Estate taxation with intended and accidental bequests. Journal of Public Economics, 88, 1–21.
Brown, J. R., & Finkelstein, A. (2009). The private market for long-term care insurance in the united states: A review of the evidence. The Journal of Risk and Insurance, 76(1), 5–29.
Brunner, J., & Pech, S. (2012). Optimal taxation of bequests in a model with initial wealth. Scandinavian Journal of Economics, 114(4), 1368–1392.
Cremer, H., Gavahri, F., & Pestieau, P. (2012). Accidental bequests: A curse for the rich and a boon for the poor. Scandinavian Journal of Economics, 114, 1437–1459.
Cremer, H., & Pestieau, P. (2006). Chapter 16: Wealth transfer taxation: A survey of the theoretical literature, Handbook of the economics of giving, altruism and reciprocity (Vol. 1, pp. 1107–1134). Elsevier North Holland.
Cremer, H., & Pestieau, P. (2014). Social long-term care insurance and redistribution. International Tax and Public Finance, 21, 955–974.
Cremer, H., Pestieau, P., & Roeder, K. (2016). Social long-term care insurance with two-sided altruism. Research in Economics, 70(1), 101–109.
García-Miralles, E. (2020). The crucial role of social welfare criteria and individual heterogeneity for optimal inheritance taxation. The B.E. Journal of Economic Analysis & Policy, 20(2), 20190274.
Glomm, G., & Ravikumar, B. (1992). Public versus private investment in human capital: Endogenous growth and income inequality. Journal of Political Economy, 100(4), 818–834.
Farhi, E., & Werning, I. (2013). Estate taxation with altruism heterogeneity. American Economic Review, Papers and Proceedings, 103(3), 489–495.
Fleurbaey, M., Leroux, M.-L., Pestieau, P., Ponthiere, G., & Zuber, S. (2017). Premature deaths, accidental bequests and fairness (CESifo Working Paper Series 6802), CESifo, Munich. https://ideas.repec.org/p/ces/ceswps/_6802.html
Kopczuk, W., & Lupton, J. P. (2007). To leave or not to leave: The distribution of bequest motives. The Review of Economic Studies, 74(1), 207–235.
Lefebvre, M., Perelman, S., & Schoenmaeckers, J. (2018). Inégalités face à la mort et au risque de dépendance. Revue Française d'Economie, 33(2), 75–112.
Leroux, M.-L., Ponthiere, G., & Pestieau, P. (2021). Fair long-term care insurance. Social Choice and Welfare. https://doi.org/10.1007/s00355-021-01324-z
Lockwood, L. (2018). Incidental bequests and the choice to self-insure late-life risks. American Economic Review, 108(9), 2513–2550.
Nishimura, Y., & Pestieau, P. (2016). Efficient taxation with differential risks of dependence and mortality. Economics Bulletin, 36(1), 52–57.
OECD. (2011). Help wanted? Providing and paying for long-term care. OECD Publishing.
OECD. (2018). The role and design of net wealth taxes in the OECD (No. 26). https://doi.org/10.1787/19900538
Pestieau, P., & Ponthiere, G. (2011). The long term care insurance puzzle. In J. Costa-Font (Ed.), Financing long-term care in Europe—Institutions (41–52). Palgrave MacMillan.
Pestieau, P., & Ponthiere, G. (2018). An age-differentiated tax on bequests (CORE Discussion Paper, 2018/06).11 pp.
Pestieau, P., & Ponthiere, G. (2019). An age differentiated tax on bequests. In G. Bognar, & A. Gosseries (Eds.), Age policies—Normative theory and proposals, forthcoming.
Pestieau, P., & Sato, M. (2008). Estate taxation with both accidental and planned bequests. Asia-Pacific Journal of Accounting & Economics, 15, 223–240.
Piketty, T., & Saez, E. (2013). A theory of optimal inheritance taxation. Econometrica, 81(5), 1851–1886.
Sheshinski, E. (1972). The optimal linear income-tax. Review of Economic Studies, 39(3), 297–302.
Vickrey, W. (1945). An integrated successions tax. In R. Arnott, K. Arrow, A. Atkinson, & J. Drèze (Eds.), Public economics. Selected Papers by William Vickrey (pp. 135-150). Cambridge University Press (Original work published 1994).
Similar publications
Sorry the service is unavailable at the moment. Please try again later.
This website uses cookies to improve user experience. Read more
Save & Close
Accept all
Decline all
Show detailsHide details
Cookie declaration
About cookies
Strictly necessary
Performance
Strictly necessary cookies allow core website functionality such as user login and account management. The website cannot be used properly without strictly necessary cookies.
This cookie is used by Cookie-Script.com service to remember visitor cookie consent preferences. It is necessary for Cookie-Script.com cookie banner to work properly.
Performance cookies are used to see how visitors use the website, eg. analytics cookies. Those cookies cannot be used to directly identify a certain visitor.
Used to store the attribution information, the referrer initially used to visit the website
Cookies are small text files that are placed on your computer by websites that you visit. Websites use cookies to help users navigate efficiently and perform certain functions. Cookies that are required for the website to operate properly are allowed to be set without your permission. All other cookies need to be approved before they can be set in the browser.
You can change your consent to cookie usage at any time on our Privacy Policy page.