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The Behavioral Response of Wealth Accumulation to Estate Taxation: Time Series Evidence

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  • Joulfaian, David

Abstract

This paper explores the behavioral response of taxable bequests to estate taxation. To gauge its effects, the estate tax is converted to an equivalent income tax. This highlights the importance of expected rates of return, and also makes it possible to compare effective tax rates on saving over time. Using data on federal revenues from the estate tax over the past 50 years, and employing the equivalent income tax rate measure, the findings suggest that estate taxes have a dampening effect on the reported size of taxable estates. Estate taxation seems to depress taxable bequests by almost ten percent.

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  • Joulfaian, David, 2006. "The Behavioral Response of Wealth Accumulation to Estate Taxation: Time Series Evidence," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(2), pages 253-268, June.
    • Handle: RePEc:ntj:journl:v:59:y:2006:i:2:p:253-68
    DOI: 10.17310/ntj.2006.2.04
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    Cited by:

    1. Niimi, Yoko, 2016. "To Avoid or Not to Avoid Inheritance Taxes? That Is the Question for Parents: Empirical Evidence from Japan," AGI Working Paper Series 2016-13, Asian Growth Research Institute.
    2. Stefanie Stantcheva, 2020. "Dynamic Taxation," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 801-831, August.
    3. Daron Acemoglu & Andrea Manera & Pascual Restrepo, 2020. "Does the US Tax Code Favor Automation?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(1 (Spring), pages 231-300.
    4. Marius Brülhart & Jonathan Gruber & Matthias Krapf & Kurt Schmidheiny, 2022. "Behavioral Responses to Wealth Taxes: Evidence from Switzerland," American Economic Journal: Economic Policy, American Economic Association, vol. 14(4), pages 111-150, November.
    5. Arun Advani & Hannah Tarrant, 2021. "Behavioural responses to a wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 509-537, September.
    6. Fella, Giulio & Blomhoff Holm, Martin & Pugh, Thomas M., 2024. "Saving after Retirement and Preferences for Residual Wealth," CEPR Discussion Papers 19233, C.E.P.R. Discussion Papers.
    7. Glogowsky, Ulrich, 2021. "Behavioral responses to inheritance and gift taxation: Evidence from Germany," Journal of Public Economics, Elsevier, vol. 193(C).
    8. Jappelli, Tullio & Padula, Mario & Pica, Giovanni, 2010. "Estate Taxation and Intergenerational Transfers," CEPR Discussion Papers 7701, C.E.P.R. Discussion Papers.
    9. Chirvi, Malte & Schneider, Cornelius, 2019. "Stated preferences for capital taxation - tax design, misinformation and the role of partisanship," arqus Discussion Papers in Quantitative Tax Research 242, arqus - Arbeitskreis Quantitative Steuerlehre.
    10. Chirvi, Malte & Schneider, Cornelius, 2020. "Preferences for wealth taxation: Design, framing and the role of partisanship," arqus Discussion Papers in Quantitative Tax Research 260, arqus - Arbeitskreis Quantitative Steuerlehre.
    11. Bellettini, Giorgio & Taddei, Filippo & Zanella, Giulio, 2017. "Intergenerational altruism and house prices: Evidence from bequest tax reforms in Italy," European Economic Review, Elsevier, vol. 92(C), pages 1-12.
    12. Goupille-Lebret, Jonathan & Infante, Jose, 2018. "Behavioral responses to inheritance tax: Evidence from notches in France," Journal of Public Economics, Elsevier, vol. 168(C), pages 21-34.
    13. Mikawa, Naoto & Yasuda, Shohei & Yukutake, Norifumi, 2023. "Does inheritance taxation reform promote to build inexpensive rental housing?," Journal of the Japanese and International Economies, Elsevier, vol. 68(C).
    14. Jappelli, T. & Padula, M. & Pica, G., 2011. "GINI DP 21: Transfer Taxes and Inequality," GINI Discussion Papers 21, AIAS, Amsterdam Institute for Advanced Labour Studies.
    15. 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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