Behavioral Responses to Inheritance and Gift Taxation: Evidence from Germany

86 Pages Posted: 20 Oct 2020

See all articles by Ulrich Glogowsky

Ulrich Glogowsky

Ludwig Maximilian University of Munich (LMU)

Date Written: 2020

Abstract

The desirability of inheritance and gift taxes depends on individuals’ tax responsiveness. This paper demonstrates how strongly, and in what way, the German inheritance and gift tax influences taxpayer behavior. To that end, it combines administrative data with cross-bracket tax variation: a convex kink in the tax liability precedes a concave kink. Extending the bunching approach to such double-kinked tax schedules, I document that individuals tailor their taxable wealth transfers to the schedules. One type of response dominates for inheritances: testators engage in testament planning. The magnitude of the testament-planning response is comparable to that of inter vivos gifts. However, neither the overall responses of gifts nor those of inheritances heavily interfere with tax revenue collection: the associated short-run net-of-tax elasticities of taxable wealth transfers lie below 0.1.

Keywords: wealth-transfer tax, inheritance tax, gift tax, estate tax, real responses, tax avoidance, tax evasion, behavioral responses, bunching at kinks

JEL Classification: H200, H200, H210, H240, H260, H310

Suggested Citation

Glogowsky, Ulrich, Behavioral Responses to Inheritance and Gift Taxation: Evidence from Germany (2020). CESifo Working Paper No. 8628, Available at SSRN: https://ssrn.com/abstract=3715280

Ulrich Glogowsky (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
18
Abstract Views
76
PlumX Metrics