The Tax Treatment of Intergenerational Wealth Transfers

Cremer, Helmuth

doi:10.1093/cesifo/ifr014

Cited by 20 publications

(11 citation statements)

References 40 publications

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“…(ν = 0), the optimal tax rate remains under 100%. This result differs from previous models, like Cremer and Pestieau (2011), in which fully accidental bequest motives are taxed at a 100% rate. The reason is that the flexibility of the model of PS13 allows for the unconventional case where bequest motives are fully accidental but the bequest elasticity is positive.…”

Section: Variants Of the Benchmark Casecontrasting

confidence: 99%

“…However, when the utility of the second generation is included in the social welfare the optimal inheritance tax rate becomes negative to correct for the positive externality caused by joy of giving motives. Cremer and Pestieau (2011) use an overlaping generations model based on Diamond (1965) and extend it to model inheritances, showing how the optimal inheritance tax rate depends on the bequest motives. If bequests are fully accidental, a tax rate of 100% is optimal.…”

Section: Review Of the Literaturementioning

confidence: 99%

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The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation

García-Miralles

2020

The B.E. Journal of Economic Analysis &Amp; Policy

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This paper extends the calibrations of Piketty and Saez (2013. “A Theory of Optimal Inheritance Taxation.” Econometrica 81 (5): 1851–86) to unveil the importance of the assumed social welfare criteria and its interplay with individual heterogeneity on optimal inheritance taxation. I calibrate the full social optimal tax rate and find that it is highly sensitive to the assumed social welfare criteria. The optimal tax rate ranges from negative (under a utilitarian criterion) to positive and large (even assuming joy of giving motives). A decreasing marginal utility of consumption does not affect the results qualitatively, given the underlying distribution of wealth and income. I also calibrate the optimal tax rate by percentile of the distribution of bequest received, as in Piketty and Saez, but accounting for heterogeneity in wealth and labor income. This leads to significant variation in the optimal tax rate among zero-bequest receivers, contrary to their finding of a constant tax rate.

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Section: Variants Of the Benchmark Casecontrasting

confidence: 99%

Section: Review Of the Literaturementioning

confidence: 99%

The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation

García-Miralles

2020

The B.E. Journal of Economic Analysis &Amp; Policy

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“…This timing effect is expected to emerge regardless of the motive, though it is likely to be larger when transfers are altruistically motivated. While the literature contains different views on the impact of wealth transfer taxes on capital accumulation (e.g., Cremer and Pestieau 2011;Piketty and Saez 2013), scholars generally agree that these taxes reduce inequality in wealth and income (e.g., Bossmann, Kleiber, and Wälde 2007;Gale and Slemrod 2001;Hines 2013).…”

Section: Review Of Literaturementioning

confidence: 99%

Should Wealth Transfers Be Taxed? Evidence from a Representative German Survey

Bischoff

Kusa

2019

Public Finance Review

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In a representative survey, German citizens are asked whether inherited wealth beyond a certain amount should be taxed. Almost 60 percent state that it should not be taxed. Building on this survey, we identify factors that predict this opposition to the taxation of inherited wealth. We find monetary self-interest, redistributive preferences, and the adherence to traditional values to matter. Women are more likely to oppose wealth transfer taxes. We account for interdependencies to other intrafamilial transfers. Subjects' attitude toward wealth transfer taxes does not depend on their personal experience in giving long-term care. Yet subjects who expect the typical German family to reward intrafamilial caregiving through higher wealth transfers are less likely to oppose the taxation of inherited wealth. The opposite holds for subjects who expect these taxes to incentivize earlier inter vivos transfers.

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“…Therefore, it is important to investigate the strength of the bequest motive in order to better assess the relationship between credit and wealth inequality. In a similar vein, some studies in wealth taxation have pointed out that much more must be done to understand what is the incidence of bequest motives because the responses to estate taxation crucially depend on these motives (Kopczuk (2013), Pestieau and Thibault (2012), Cremer and Pestieau (2011) and Cigno et al (2011)).…”

Section: Insert Figure 1 Herementioning

confidence: 99%

Macroprudential policy and household wealth inequality

Carpantier

Olivera

Kerm

2018

Journal of International Money and Finance

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Macroprudential policies, such as caps on loan-to-value (LTV) ratios, have become part of the policy paradigm in emerging markets and advanced countries alike. Given that housing is the most important asset in household portfolios, relaxing or tightening access to mortgages may affect the distribution of household wealth in the country. In a stylised model we show that the final level of wealth inequality depends on the size of the LTV ratio, housing prices, credit cost and the strength of a bequest motive; ultimately with no unequivocal effect of LTV ratios on wealth inequality. These trade-offs are illustrated with estimations of "Gini Recentered Inuence Function" regressions on household survey data from 12 eurozone countries that participated in the first wave of the Household Finance and Consumption Survey (HFCS). The results show that, among the households with active mortgages, high LTV ratios at the time of acquisition are related to high contributions to wealth inequality today, while house price increases are negatively related to inequality contributions. A proxy for the strength of bequest motives tends to be negatively related with wealth inequality, but credit cost does not show a significant link to the distribution of wealth.

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The Tax Treatment of Intergenerational Wealth Transfers

Cited by 20 publications

References 40 publications

The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation

The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation

Should Wealth Transfers Be Taxed? Evidence from a Representative German Survey

Macroprudential policy and household wealth inequality

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