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Accidental bequests: a curse for the rich and a boon for the poor

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Cremer, Helmuth [Toulouse School of Economics] Gahvari, Firouz [University of Illinois at Urbana-Champaign] Pestieau, Pierre [Université de Liège]

When accidental bequests signal otherwise unobservable individual characteristics, such as productivity and longevity, the population should be partitioned into two groups: those who do not receive an inheritance and those who do. The first tagged group receives a Mirrlees second-best tax schedule; the second group, when its type is fully revealed, faces a first-best tax schedule. Receiving an inheritance makes high-ability types worse off and low-ability types better off. High-ability individuals face a bequest tax of more than 100 percent, while low-ability types face a bequest tax that can be smaller, as well as larger, than 100 percent, and it might even be negative.

Document type Article de périodique (Journal article) – Article de recherche
Access type Accès interdit
Publication date 2012
Language Anglais
Journal information "The Scandinavian journal of economics" - Vol. 114, no. 4, p. 1437-1459 (2012)
Peer reviewed yes
Publisher Basil Blackwell ((United Kingdom) [S.l.])
issn 0347-0520
e-issn 1467-9442
Publication status Publié
Affiliations Toulouse School of Economics -
University of Illinois at Urbana-Champaign -
Université de Liège -
Keywords accidental bequests ; estate tax ; firs-best ; second-best ; tagging
Links
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Bibliographic reference Cremer, Helmuth ; Gahvari, Firouz ; Pestieau, Pierre. Accidental bequests: a curse for the rich and a boon for the poor. In: The Scandinavian journal of economics, Vol. 114, no. 4, p. 1437-1459 (2012)
Permanent URL http://hdl.handle.net/2078/122483