IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v41y2013i6p885-903.html
   My bibliography  Save this article

The Redistributive Potential of Transfer Taxation

Author

Listed:
  • James R. Hines Jr.

Abstract

The United States imposes substantial federal taxes on estates, gifts, and generation-skipping transfers exceeding high exemption levels (currently US$5.25 million). These transfer taxes are very distortionary compared to other federal taxes, and raise little revenue; their appeal lies in their distributional properties. Gratuitous transfers benefit both those who make the transfers and those who receive them; transfer taxes therefore impose burdens on both donors and recipients, in addition to distorting economic behavior. This article considers a potential reform of replacing federal transfer taxes with greater income taxes on the highest-income earners. Such a reform holds the prospect of raising additional federal tax revenue with improved efficiency and greater measured tax progressivity.

Suggested Citation

  • James R. Hines Jr., 2013. "The Redistributive Potential of Transfer Taxation," Public Finance Review, , vol. 41(6), pages 885-903, November.
    • Handle: RePEc:sae:pubfin:v:41:y:2013:i:6:p:885-903
    DOI: 10.1177/1091142113499964
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1091142113499964
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1091142113499964?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bernheim, B. Douglas & Lemke, Robert J. & Scholz, John Karl, 2004. "Do estate and gift taxes affect the timing of private transfers?," Journal of Public Economics, Elsevier, vol. 88(12), pages 2617-2634, December.
    2. Emmanuel Farhi & Iván Werning, 2010. "Progressive Estate Taxation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 635-673.
    3. Jon M. Bakija & William G. Gale & Joel B. Slemrod, 2003. "Charitable Bequests and Taxes on Inheritances and Estates: Aggregate Evidence from across States and Time," American Economic Review, American Economic Association, vol. 93(2), pages 366-370, May.
    4. Brunetti, Michael J., 2005. "The Estate Tax and Charitable Bequests: Elasticity Estimates Using Probate Records," National Tax Journal, National Tax Association;National Tax Journal, vol. 58(2), pages 165-188, June.
    5. Wojciech Kopczuk, 2007. "Bequest and Tax Planning: Evidence from Estate Tax Returns," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1801-1854.
    6. David Joulfaian, 2006. "Inheritance and Saving," NBER Working Papers 12569, National Bureau of Economic Research, Inc.
    7. McGarry, Kathleen, 2001. "The cost of equality: unequal bequests and tax avoidance," Journal of Public Economics, Elsevier, vol. 79(1), pages 179-204, January.
    8. Wojciech Kopczuk & Joseph P. Lupton, 2007. "To Leave or Not to Leave: The Distribution of Bequest Motives," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(1), pages 207-235.
    9. Audrey Light & Kathleen McGarry, 2004. "Why Parents Play Favorites: Explanations for Unequal Bequests," American Economic Review, American Economic Association, vol. 94(5), pages 1669-1681, December.
    10. Joulfaian, David, 2005. "Choosing between gifts and bequests: How taxes affect the timing of wealth transfers," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2069-2091, December.
    11. Friedman, David D, 1988. "Does Altruism Produce Efficient Outcomes? Marshall versus Kaldor," The Journal of Legal Studies, University of Chicago Press, vol. 17(1), pages 1-13, January.
    12. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.
    13. Joulfaian, David, 2000. "Estate Taxes and Charitable Bequests by the Wealthy," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(3), pages 743-764, September.
    14. Nordblom, Katarina & Ohlsson, Henry, 2006. "Tax avoidance and intra-family transfers," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1669-1680, September.
    15. Kaplow, Louis, 1995. "A note on subsidizing gifts," Journal of Public Economics, Elsevier, vol. 58(3), pages 469-477, November.
    16. Page, Benjamin R., 2003. "Bequest taxes, inter vivos gifts, and the bequest motive," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1219-1229, May.
    17. Auerbach, Alan J. & Hines, James Jr., 2002. "Taxation and economic efficiency," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 21, pages 1347-1421, Elsevier.
    18. James R. Hines Jr., 2013. "How Important Are Perpetual Tax Savings?," Tax Policy and the Economy, University of Chicago Press, vol. 27(1), pages 101-124.
    19. McGarry, Kathleen, 1999. "Inter vivos transfers and intended bequests," Journal of Public Economics, Elsevier, vol. 73(3), pages 321-351, September.
    20. Joulfaian, David, 1991. "Charitable Bequests and Estate Taxes," National Tax Journal, National Tax Association, vol. 44(2), pages 169-80, June.
    21. Douglas Holtz-Eakin & Donald Marples, 2001. "Distortion Costs of Taxing Wealth Accumulation: Income Versus Estate Taxes," NBER Working Papers 8261, National Bureau of Economic Research, Inc.
    22. James R. Hines, 2013. "Income and Substitution Effects of Estate Taxation," American Economic Review, American Economic Association, vol. 103(3), pages 484-488, May.
    23. A. J. Auerbach & M. Feldstein (ed.), 2002. "Handbook of Public Economics," Handbook of Public Economics, Elsevier, edition 1, volume 4, number 4.
    24. Joulfaian, David & McGarry, Kathleen, 2004. "Estate and Gift Tax Incentives and Inter Vivos Giving," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 429-444, June.
    25. Poterba, James, 2001. "Estate and gift taxes and incentives for inter vivos giving in the US," Journal of Public Economics, Elsevier, vol. 79(1), pages 237-264, January.
    26. Joel Slemrod & Wojciech Kopczuk, 2000. "The Impact of the Estate Tax on the Wealth Accumulation and Avoidance Behavior of Donors," NBER Working Papers 7960, National Bureau of Economic Research, Inc.
    27. A. J. Auerbach & M. Feldstein (ed.), 2002. "Handbook of Public Economics," Handbook of Public Economics, Elsevier, edition 1, volume 3, number 3.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marta Melguizo Garde, 2007. "La motivación de las transmisiones lucrativas entre generaciones de una familia: modelos teóricos y evidencia empírica," Hacienda Pública Española / Review of Public Economics, IEF, vol. 181(2), pages 81-118, June.
    2. Margit Schratzenstaller, 2023. "Behavioral Responses to Inheritance Taxation. A Review of the Empirical Literature," WIFO Working Papers 668, WIFO.
    3. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.
    4. 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.
    5. 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.
    6. James R. Hines Jr., 2013. "How Important Are Perpetual Tax Savings?," Tax Policy and the Economy, University of Chicago Press, vol. 27(1), pages 101-124.
    7. Niimi, Yoko, 2016. "To Avoid or Not to Avoid Inheritance Taxes? That Is the Question for Parents: Empirical Evidence from Japan," MPRA Paper 71693, University Library of Munich, Germany.
    8. James R. Hines & Niklas Potrafke & Marina Riem & Christoph Schinke, 2019. "Inter vivos transfers of ownership in family firms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 225-256, April.
    9. Sommer, Eric, 2017. "Wealth Transfers and Tax Planning: Evidence for the German Bequest Tax," IZA Discussion Papers 11120, Institute of Labor Economics (IZA).
    10. Bernheim, B. Douglas & Lemke, Robert J. & Scholz, John Karl, 2004. "Do estate and gift taxes affect the timing of private transfers?," Journal of Public Economics, Elsevier, vol. 88(12), pages 2617-2634, December.
    11. Sungmun Choi, 2017. "Does past experience affect future behavior? Evidence from estate tax avoidance behavior," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(3), pages 416-431, June.
    12. Joulfaian, David, 2014. "To own or not to own your life insurance policy?," Journal of Public Economics, Elsevier, vol. 118(C), pages 120-127.
    13. Arun Advani & Hannah Tarrant, 2021. "Behavioural responses to a wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 509-537, September.
    14. Wojciech Kopczuk, 2010. "Economics of estate taxation: a brief review of theory and evidence," NBER Working Papers 15741, National Bureau of Economic Research, Inc.
    15. Leganza, Jonathan M., 2024. "The effect of required minimum distributions on intergenerational transfers," Journal of Public Economics, Elsevier, vol. 232(C).
    16. Joulfaian, David, 2005. "Choosing between gifts and bequests: How taxes affect the timing of wealth transfers," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2069-2091, December.
    17. Glogowsky, Ulrich, 2016. "Behavioral Responses to Wealth Transfer Taxation: Bunching Evidence from Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145922, Verein für Socialpolitik / German Economic Association.
    18. Nordblom, Katarina & Ohlsson, Henry, 2006. "Tax avoidance and intra-family transfers," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1669-1680, September.
    19. Escobar, Sebastian & Ohlsson, Henry & Selin, Håkan, 2023. "Giving to the children or the taxman?," European Economic Review, Elsevier, vol. 153(C).
    20. Brunner Johann K., 2014. "Die Erbschaftsteuer – Bestandteil eines optimalen Steuersystems?," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(3), pages 199-218, October.

    More about this item

    Keywords

    estate tax; gift tax; tax reform;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:41:y:2013:i:6:p:885-903. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.