Progressive Estate Taxation

39 Pages Posted: 21 Oct 2006

See all articles by Emmanuel Farhi

Emmanuel Farhi

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Iván Werning

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 25, 2006

Abstract

For an economy with altruistic parents facing productivity shocks, the optimal estate taxation is progressive: fortunate parents should face lower net returns on their inheritances. This progressivity reflects optimal mean reversion in consumption, which ensures that a long-run steady state exists with bounded inequality-avoiding immiseration.

Keywords: progressivity, inheritance, estate taxation

JEL Classification: E6

Suggested Citation

Farhi, Emmanuel and Werning, Ivan, Progressive Estate Taxation (September 25, 2006). MIT Department of Economics Working Paper No. 06-27, Available at SSRN: https://ssrn.com/abstract=932764 or http://dx.doi.org/10.2139/ssrn.932764

Emmanuel Farhi

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Ivan Werning (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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HOME PAGE: http://econ-www.mit.edu/faculty/iwerning

National Bureau of Economic Research (NBER) ( email )

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