Abstract

http://ssrn.com/abstract=273701
 
 

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Do Estate and Gift Taxes Affect the Timing of Private Transfers?


B. Douglas Bernheim


Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Robert J. Lemke


Lake Forest College - Department of Economics

John Karl Scholz


University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER)

June 2001

NBER Working Paper No. w8333

Abstract:     
Proposals to alter the estate tax are contentious and have been debated largely in an empirical vacuum. This paper examines time series and cross-sectional variation to identify the effects of gift and estate taxation on the timing of private transfers. The analysis is based on data from the 1989, 1992, 1995, and 1998 waves of the Surveys of Consumer Finances. Legislative activity during this period reduced the tax disadvantage of bequests relative to gifts. Moreover, the magnitude of this reduction differed systematically across identifiable household categories. We find that households experiencing larger declines in the expected tax disadvantages of bequests substantially reduced inter vivos transfers relative to households experiencing small declines in the tax disadvantages of bequests. This implies that the timing of transfers is highly responsive to applicable gift and estate tax rates. These conclusions are based both on simple comparisons of the probability of giving across different time periods and groups, and on empirical specifications that control for a variety of potentially confounding factors, such as systematic changes in the fraction of wealth attributable to unrealized capital gains. The results also provide evidence of a systematic bequest motive for some high-wealth households.

Number of Pages in PDF File: 42

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Date posted: June 16, 2001  

Suggested Citation

Bernheim, B. Douglas and Lemke, Robert J. and Scholz, John Karl, Do Estate and Gift Taxes Affect the Timing of Private Transfers? (June 2001). NBER Working Paper No. w8333. Available at SSRN: http://ssrn.com/abstract=273701

Contact Information

B. Douglas Bernheim (Contact Author)
Stanford University - Department of Economics ( email )
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
650-725-8732 (Phone)
650-725-5702 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Robert J. Lemke
Lake Forest College - Department of Economics ( email )
555 N. Sheridan Road
Lake Forest, IL 60045
847-735-5143 (Phone)
847-735-6193 (Fax)
John Karl Scholz
University of Wisconsin - Madison - Department of Economics ( email )
1180 Observatory Drive
Madison, WI 53706
United States
608-262-5380 (Phone)
608-262-2033 (Fax)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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