Premature Deaths, Accidental Bequests and Fairness

33 Pages Posted: 16 Feb 2018

See all articles by Marc Fleurbaey

Marc Fleurbaey

Princeton University - Woodrow Wilson School of Public and International Affairs

M.‐L. Leroux

University of Quebec at Montreal (UQAM)

Pierre Pestieau

University of Liege - Research Center on Public and Population Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Gregory Ponthiere

Paris School of Economics (PSE)

Stéphane Zuber

Paris School of Economics (PSE)

Date Written: January 11, 2018

Abstract

While little agreement exists regarding the taxation of bequests in general, there is a widely held view that accidental bequests should be subject to a confiscatory tax. We propose to reexamine the optimal taxation of accidental bequests in an economy where individuals care about what they leave to their offspring in case of premature death. We show that, whereas the conventional 100% tax view holds under the standard utilitarian social welfare criterion, it does not hold under the ex post egalitarian criterion, which assigns a strong weight to the welfare of unlucky short-lived individuals. From an egalitarian perspective, it is optimal not to tax, but to subsidize accidental bequests. We examine the robustness of those results in a dynamic OLG model of wealth accumulation, and show that, whereas the sign of the optimal tax on accidental bequests depends on the form of the joy of giving motive, it remains true that the 100% tax view does not hold under the ex post egalitarian criterion.

Keywords: mortality, accidental bequests, optimal taxation, egalitarianism, OLG models

JEL Classification: D630, D640, D910, H310, J100

Suggested Citation

Fleurbaey, Marc and Leroux, Marie-Louise and Pestieau, Pierre and Ponthiere, Gregory and Zuber, Stéphane, Premature Deaths, Accidental Bequests and Fairness (January 11, 2018). CESifo Working Paper Series No. 6802. Available at SSRN: https://ssrn.com/abstract=3124120

Marc Fleurbaey

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Marie-Louise Leroux (Contact Author)

University of Quebec at Montreal (UQAM) ( email )

PB 8888 Station DownTown
Succursale Centre Ville
Montreal, Quebec H3C3P8
Canada

Pierre Pestieau

University of Liege - Research Center on Public and Population Economics ( email )

Boulevard du Rectorat, 7, Batiment 31
Sart-Tilman
B-4000 Liege, 4000
Belgium
+32 4 366 3108 (Phone)
+32 4 366 3106 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Vopie Roman Pays
Louvain la Neuve
Belgium

Gregory Ponthiere

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Stéphane Zuber

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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