The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation
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The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation. / Garcia Miralles, Esteban.
I: The B.E. Journal of Economic Analysis & Policy, Bind 10, Nr. 2, 29.01.2020.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation
AU - Garcia Miralles, Esteban
PY - 2020/1/29
Y1 - 2020/1/29
N2 - This paper extends the calibrations of Piketty and Saez (2013) 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.
AB - This paper extends the calibrations of Piketty and Saez (2013) 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.
KW - Faculty of Social Sciences
KW - optimal inheritance taxation
KW - social welfare function
KW - wealth inequality
U2 - 10.1515/bejeap-2019-0274
DO - 10.1515/bejeap-2019-0274
M3 - Journal article
VL - 10
JO - The B.E. Journal of Economic Analysis & Policy
JF - The B.E. Journal of Economic Analysis & Policy
SN - 2194-6108
IS - 2
ER -
ID: 234502383