Working Paper: NBER ID: w15818
Authors: Louis Kaplow
Abstract: This essay considers the appropriate conceptual framework for assessing the taxation of private transfers to individuals. Although it is conventional to emphasize the role of estate and gift taxation or inheritance taxation in redistributing income from the rich to the poor, the revenue effects of transfer taxation, and its distortionary effect on labor supply and savings, it is suggested in line with some recent work that the dominant focus should be on positive and negative externalities attributable to giving. The fundamental reason is that transfer tax reform can be combined with adjustments to other aspects of the fiscal system, notably the income tax, so as to keep constant most effects other than externalities.
Keywords: No keywords provided
JEL Codes: H21; H23; H24; K34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| transfer tax reform (H29) | internalizing positive externalities (D62) |
| transfer tax reform (H29) | internalizing negative externalities (D62) |
| gifts enhance welfare of recipients (D64) | positive externalities on donees (D64) |
| gifts reduce labor supply (J22) | negative externalities on public fisc (H69) |
| concentration of wealth and power (D30) | negative externality (D62) |
| net externalities are negative (D62) | taxation may be warranted (H20) |
| net externalities are positive (D62) | subsidization may be warranted (H20) |