Behavioral Responses to Inheritance Tax: Evidence from Notches in France

54 Pages Posted: 14 Dec 2017

See all articles by Jonathan Goupille -Lebret

Jonathan Goupille -Lebret

Ecole Normale Supérieure (ENS) de Lyon; Groupe d'Analyse et de Theorie Economique (GATE), CNRS, University of Lyon; INSEAD

Jose Infante

AXA Group

Date Written: November 30, 2017

Abstract

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

Goupille -Lebret, Jonathan and Infante, Jose, Behavioral Responses to Inheritance Tax: Evidence from Notches in France (November 30, 2017). INSEAD Working Paper No. 2017/76/EPS, Available at SSRN: https://ssrn.com/abstract=3088000 or http://dx.doi.org/10.2139/ssrn.3088000

Jonathan Goupille -Lebret (Contact Author)

Ecole Normale Supérieure (ENS) de Lyon ( email )

15, parvis Rene Descartes BP 7000
Lyon Cedex 07, 69342
France

Groupe d'Analyse et de Theorie Economique (GATE), CNRS, University of Lyon ( email )

93 Chemin des Mouilles
Ecully, 69130
France

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Jose Infante

AXA Group ( email )

25 avenue Matignon
Paris, 75008
France

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