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Deathbed tax planning

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  • Erixson, Oscar
  • Escobar, Sebastian

Abstract

We estimate the extent of inheritance tax avoidance among married decedents in Sweden. Following Kopczuk (2007), we compare estates of decedents who pass away from terminal illness and those of decedents who pass away suddenly, the assumption being that the onset of terminal illness triggers planning. Extending on Kopczuk (2007), we also use exogenous variation in the incentives for tax planning created by an inheritance tax repeal in Sweden, which allows us to account for factors related to illness that may affect the estate value but are unrelated to tax planning (e.g., increased medical expenditures and lost income). Unlike earlier studies, we find no evidence of end-of-life inheritance tax planning, suggesting that this was of little importance in the setting we study.

Suggested Citation

  • Erixson, Oscar & Escobar, Sebastian, 2020. "Deathbed tax planning," Journal of Public Economics, Elsevier, vol. 185(C).
    • Handle: RePEc:eee:pubeco:v:185:y:2020:i:c:s0047272720300347
    DOI: 10.1016/j.jpubeco.2020.104170
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    References listed on IDEAS

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    Cited by:

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    2. Alexander Krenek & Margit Schratzenstaller-Altzinger & Klaus Grünberger & Andreas Thiemann, 2021. "INTAXMOD – Inheritance and Gift Taxation in the Context of Ageing," WIFO Working Papers 645, WIFO.
    3. Saisawat Samutpradit, 2024. "Surviving Loss: Coping Strategies among Widow Households in Thai Rural Areas," PIER Discussion Papers 213, Puey Ungphakorn Institute for Economic Research.
    4. David Sturrock & Stefan Groot & Jan Möhlmann, 2022. "Wealth, gifts, and estate planning at the end of life," CPB Discussion Paper 442, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Margit Schratzenstaller, 2023. "Behavioral Responses to Inheritance Taxation. A Review of the Empirical Literature," WIFO Working Papers 668, WIFO.
    6. Escobar, Sebastian & Ohlsson, Henry & Selin, Håkan, 2023. "Giving to the children or the taxman?," European Economic Review, Elsevier, vol. 153(C).
    7. Dominik Bernhofer & Michael Ertl & Petra Innreiter & Pascal Schraml & Eva Six & Max Wehsely, 2024. "Ausgestaltung und Herausforderungen einer modernen Erbschafts- und Schenkungssteuer in Österreich," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 50(1), pages 43-81.

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    More about this item

    Keywords

    Tax avoidance; Tax reform; Terminal illness;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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