The optimal inheritance tax in the presence of investment in education

Michel Strawczynski

doi:10.1007/s10797-014-9324-1

The optimal inheritance tax in the presence of investment in education

Michel Strawczynski^*

^*Corresponding author for this work

Department of Economics

Research output: Contribution to journal › Article › peer-review

3 Scopus citations

Abstract

This paper provides an example aimed at calculating the optimal inheritance tax in a model in which inheritances are used to finance investment in education. Two results are obtained: (1) The optimal inheritance tax schedule includes a threshold, estimated between 2.5 and 5.5 times per-capita GDP. This result holds for a Rawlsian social planner that maximizes the welfare of the poorest individual, who does not leave bequests. (2) Contrary to the result of a 100 % tax on pure accidental bequests, the optimal simulated tax rates are between 28 %, for the case of educational bequests, and 57 %, for the case where educational and accidental bequests interact. This range is in line with existing schedules in developed economies.

Original language	English
Pages (from-to)	768-795
Number of pages	28
Journal	International Tax and Public Finance
Volume	21
Issue number	4
DOIs	https://doi.org/10.1007/s10797-014-9324-1
State	Published - Aug 2014

Bibliographical note

Discussion paper series (Feher Institute)
Publisher name: The Federmann School of Public Policy & Government, 2012.

Keywords

Inheritance tax
Investment in education
Threshold

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1007/s10797-014-9324-1

Cite this

@article{ebff42dec4874b37951a454599fdbda9,

title = "The optimal inheritance tax in the presence of investment in education",

abstract = "This paper provides an example aimed at calculating the optimal inheritance tax in a model in which inheritances are used to finance investment in education. Two results are obtained: (1) The optimal inheritance tax schedule includes a threshold, estimated between 2.5 and 5.5 times per-capita GDP. This result holds for a Rawlsian social planner that maximizes the welfare of the poorest individual, who does not leave bequests. (2) Contrary to the result of a 100 % tax on pure accidental bequests, the optimal simulated tax rates are between 28 %, for the case of educational bequests, and 57 %, for the case where educational and accidental bequests interact. This range is in line with existing schedules in developed economies.",

keywords = "Inheritance tax, Investment in education, Threshold",

author = "Michel Strawczynski",

note = "Discussion paper series (Feher Institute) Publisher name: The Federmann School of Public Policy & Government, 2012.",

year = "2014",

month = aug,

doi = "10.1007/s10797-014-9324-1",

language = "אנגלית",

volume = "21",

pages = "768--795",

journal = "International Tax and Public Finance",

issn = "0927-5940",

publisher = "Springer New York",

number = "4",

}

TY - JOUR

T1 - The optimal inheritance tax in the presence of investment in education

AU - Strawczynski, Michel

N1 - Discussion paper series (Feher Institute) Publisher name: The Federmann School of Public Policy & Government, 2012.

PY - 2014/8

Y1 - 2014/8

N2 - This paper provides an example aimed at calculating the optimal inheritance tax in a model in which inheritances are used to finance investment in education. Two results are obtained: (1) The optimal inheritance tax schedule includes a threshold, estimated between 2.5 and 5.5 times per-capita GDP. This result holds for a Rawlsian social planner that maximizes the welfare of the poorest individual, who does not leave bequests. (2) Contrary to the result of a 100 % tax on pure accidental bequests, the optimal simulated tax rates are between 28 %, for the case of educational bequests, and 57 %, for the case where educational and accidental bequests interact. This range is in line with existing schedules in developed economies.

AB - This paper provides an example aimed at calculating the optimal inheritance tax in a model in which inheritances are used to finance investment in education. Two results are obtained: (1) The optimal inheritance tax schedule includes a threshold, estimated between 2.5 and 5.5 times per-capita GDP. This result holds for a Rawlsian social planner that maximizes the welfare of the poorest individual, who does not leave bequests. (2) Contrary to the result of a 100 % tax on pure accidental bequests, the optimal simulated tax rates are between 28 %, for the case of educational bequests, and 57 %, for the case where educational and accidental bequests interact. This range is in line with existing schedules in developed economies.

KW - Inheritance tax

KW - Investment in education

KW - Threshold

UR - http://www.scopus.com/inward/record.url?scp=84904558752&partnerID=8YFLogxK

U2 - 10.1007/s10797-014-9324-1

DO - 10.1007/s10797-014-9324-1

M3 - ???researchoutput.researchoutputtypes.contributiontojournal.article???

AN - SCOPUS:84904558752

SN - 0927-5940

VL - 21

SP - 768

EP - 795

JO - International Tax and Public Finance

JF - International Tax and Public Finance

IS - 4

ER -

The optimal inheritance tax in the presence of investment in education

Abstract

Bibliographical note

Keywords

UN SDGs

Access to Document

Other files and links

Fingerprint

Cite this