On the Taxation of Private Transfers

28 Pages Posted: 22 Mar 2010 Last revised: 22 Sep 2010

See all articles by Louis Kaplow

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

Date Written: March 2010

Abstract

This essay considers the appropriate conceptual framework for assessing the taxation of private transfers to individuals. Although it is conventional to emphasize the role of estate and gift taxation or inheritance taxation in redistributing income from the rich to the poor, the revenue effects of transfer taxation, and its distortionary effect on labor supply and savings, it is suggested in line with some recent work that the dominant focus should be on positive and negative externalities attributable to giving. The fundamental reason is that transfer tax reform can be combined with adjustments to other aspects of the fiscal system, notably the income tax, so as to keep constant most effects other than externalities.

Suggested Citation

Kaplow, Louis, On the Taxation of Private Transfers (March 2010). NBER Working Paper No. w15818. Available at SSRN: https://ssrn.com/abstract=1574618

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