Cremer, Helmuth, Gahvari, Firouz and Pestieau, Pierre (2009) Accidental bequests: a curse for the rich and a boon for the poor. TSE Working Paper, n. 09-119, Toulouse

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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%. With a Rawlsian social welfare function, the low-ability types too face a more than 100% tax on bequests.

Item Type: Monograph (Working Paper)
Language: English
Date: November 2009
Place of Publication: Toulouse
Uncontrolled Keywords: Accidental bequests, estate tax, tagging, first best, second best
JEL Classification: H21 - Efficiency; Optimal Taxation
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 18 Jan 2012 06:01
Last Modified: 02 Apr 2021 15:36
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