Behavioral Responses to Inheritance Tax: Evidence from Notches in France
54 Pages Posted: 14 Dec 2017
Date Written: November 30, 2017
For the first time, we exploit quasi-experimental variation to investigate the impact of inheritance taxation on wealth accumulation. Using bunching and difference-in-differences methods, we directly estimate several behavioral responses during lifetime, rather than relying solely on observations at death. Our empirical findings shed new light upon wealth accumulation and bequest motives. Taken together, the small responses to inheritance tax estimated cannot be supported by the desire to retain control over wealth and could be better explained by psychological factors such as myopia or denial of death.
Keywords: Taxation, Behavioral Responses, Bunching, Bequest
JEL Classification: H21, H31, D91
Suggested Citation: Suggested Citation