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Inheritance Tax Regimes: A Comparison

Author

Listed:
  • Stefan Jestl

    (The Vienna Institute for International Economic Studies, wiiw)

Abstract
This paper provides an overview of different inheritance tax regimes in selected European countries and the United States. We identify that in the majority of countries the tax rate is related to the relationship between bequeathing party and the bequeathed as well as the value of the inherited assets. In most countries the transfer of wealth within families is treated preferentially (lower tax rates, tax exemptions and reliefs). This is particularly the case for business assets and family homes. This analysis further discusses the features and effects of inheritance tax regimes based on various criteria. These cover behavioural responses of individuals and different distributional effects of an inheritance tax. Furthermore, the amount of tax revenues varies considerably both between countries and over time. Although the actual revenues of inheritance taxation are quite low in the selected countries (ranging between 0.1% and 0.5% of GDP), some indicators point to higher revenue potentials in the future. Due to an increase in private wealth and its concentration over time, we can expect to observe an increase in inheritance tax revenues, even though countries allow a high tax-free allowance. An appropriate design of inheritance taxation could further help to foster economic growth and decelerate the increase in wealth inequality.

Suggested Citation

  • Stefan Jestl, 2018. "Inheritance Tax Regimes: A Comparison," wiiw Working Papers 152, The Vienna Institute for International Economic Studies, wiiw.
    • Handle: RePEc:wii:wpaper:152
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    File URL: https://wiiw.ac.at/inheritance-tax-regimes-a-comparison-dlp-4690.pdf
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    References listed on IDEAS

    as
    1. Wojciech Kopczuk, 2013. "Incentive Effects of Inheritances and Optimal Estate Taxation," American Economic Review, American Economic Association, vol. 103(3), pages 472-477, May.
    2. Sebastian Leitner, 2015. "Drivers of wealth inequality in euro area countries," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 137, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    3. Karagiannaki, Eleni, 2017. "The impact of inheritance on the distribution of wealth: evidence from Great Britain," LSE Research Online Documents on Economics 62622, London School of Economics and Political Science, LSE Library.
    4. Mathias Moser & Stefan Humer & Matthias Schnetzer, 2016. "Bequests and the accumulation of wealth in the Eurozone," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 149, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    5. Eleni Karagiannaki, 2017. "The Impact of Inheritance on the Distribution of Wealth: Evidence from Great Britain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(2), pages 394-408, June.
    6. Sebastian Leitner, 2016. "Drivers of wealth inequality in euro area countries: the effect of inheritance and gifts on household gross and net wealth distribution analysed by applying the Shapley value approach to decomposition," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 13(1), pages 114-136, April.
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    Cited by:

    1. Stefan Jestl, 2021. "Inheritance tax regimes: a comparison," Public Sector Economics, Institute of Public Finance, vol. 45(3), pages 363-385.
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    More about this item

    Keywords

    inheritance taxation; tax regimes; wealth inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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