Download This PaperProgressive Estate Taxation
39 Pages Posted: 20 Nov 2006 Last revised: 7 Mar 2007
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Progressive Estate Taxation
Date Written: October 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.
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