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Does the Inheritance and Gift Tax reduce wealth inequality? It depends

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  • Julio López-Laborda
Abstract
The paper determines the conditions for inheritances or gifts, first, and the Inheritance and Gift Tax (IGT), next, to reduce wealth inequality in the short run. The results show that it may not be sufficient for IGT to be progressive to reduce inequality in the distribution of wealth, but that it must be progressive enough to reinforce or reverse, as appropriate, the effect of inheritances on wealth inequality. The paper shows the conditions for this requirement to be met.

Suggested Citation

  • Julio López-Laborda, 2024. "Does the Inheritance and Gift Tax reduce wealth inequality? It depends," Working Papers 2024-06, FEDEA.
    • Handle: RePEc:fda:fdaddt:2024-06
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    References listed on IDEAS

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    1. Edward Wolff & Maury Gittleman, 2014. "Inheritances and the distribution of wealth or whatever happened to the great inheritance boom?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(4), pages 439-468, December.
    2. Simon H. Boserup & Wojciech Kopczuk & Claus T. Kreiner, 2016. "The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records," American Economic Review, American Economic Association, vol. 106(5), pages 656-661, May.
    3. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.
    4. Bönke, Timm & Werder, Marten v. & Westermeier, Christian, 2017. "How inheritances shape wealth distributions: An international comparison," Economics Letters, Elsevier, vol. 159(C), pages 217-220.
    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. Arash Nekoei & David Seim, 2023. "How Do Inheritances Shape Wealth Inequality? Theory and Evidence from Sweden," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(1), pages 463-498.
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