Article

Accidental bequests: a curse for the rich and a boon for the poor

Helmuth Cremer, Firouz Gahvari, and Pierre Pestieau

Abstract

When accidental bequests signal otherwise unobservable individual characteris- tics such as productivity and longevity, the population should be partitioned into two groups: those who do not receive an inheritance those who do. The first tagged group gets a second-best tax à la Mirrlees; the second group, when its type is fully revealed, a first-best tax schedule. Receiving an inheritance makes high-ability types worse off and low-ability types better off. High-ability individuals face a be- quest tax of more than 100%, while low-ability types face a bequest tax that can be smaller as well as larger than 100% and may even be negative.

JEL codes

  • H21: Efficiency • Optimal Taxation

Replaces

Helmuth Cremer, Firouz Gahvari, and Pierre Pestieau, Accidental bequests: a curse for the rich and a boon for the poor, TSE Working Paper, n. 09-119, November 2009.

Reference

Helmuth Cremer, Firouz Gahvari, and Pierre Pestieau, Accidental bequests: a curse for the rich and a boon for the poor, The Scandinavian Journal of Economics, vol. 114, n. 4, December 2012, pp. 1437–1459.

Published in

The Scandinavian Journal of Economics, vol. 114, n. 4, December 2012, pp. 1437–1459