Transfer Motives and Tax Policy

15 Pages Posted: 11 Jun 2000

See all articles by Louis Kaplow

Louis Kaplow

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

Date Written: March 1999

Abstract

This paper considers the optimal tax treatment of voluntary transfers to individuals in a" framework that integrates redistributive income taxation and estate and gift taxation. Under this" formulation, redistributive considerations become secondary. The optimal tax treatment of" transfers depends upon the differences between expenditures on transfers and ordinary personal" consumption. It turns out that some types of transfers confer a sort of positive externality on" donees, some create tax revenue externalities, and some affect donors' and donees' marginal" utilities of income in a manner relevant to the optimal taxation problem. Different types of" transfers have qualitatively different effects.

Suggested Citation

Kaplow, Louis, Transfer Motives and Tax Policy (March 1999). NBER Working Paper No. w6340. Available at SSRN: https://ssrn.com/abstract=226093

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