Philipp Krug

Optimal Estate Taxation: More (about) Heterogeneity across Dynasties

Section: Articles
FinanzArchiv (FA)

Online First, pp. 1-18 (18)
Published 17.05.2022

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DOI: 10.1628/fa-2022-0010
Standard models on optimal estate taxation do not allow for intergenerational transmission of bequest motives. However, correlation in bequest motives may exist due to genetic and cultural transmission of preferences or indirect reciprocity. I introduce such intergenerational correlation to a simple model with heterogeneously altruistic parents. I derive two insights for optimal linear estate taxation under a Utilitarian welfare measure. First, this correlation implies a higher optimal estate tax rate. Second, estate tax rates should be higher for those parents who inherited themselves.