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Welfare Aspects of Estate and Gift Taxes in Life Cycle Economies
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Publication Year
2023-07
Journal
The Korean Economic Review
Publisher
한국경제학회
Citation
The Korean Economic Review, Vol.39 No.2, pp.381-411
Keyword
Inter Vivos GivingEstate and Gift TaxLife-Cycle ModelWelfareGeneral Equilibrium증여유산/증여세생애주기모형복지일반균형
Abstract
We study the welfare implications of lowering estate and gift taxes in an overlapping generations model, wherein heterogeneous agents face uncertain lifetimes and leave both accidental bequests and voluntary gifts to their children. According to the findings from the Survey of Consumer Finances, we consider inter vivos giving made by a working parent while receiving bequests from his parent(s). We conduct numerical experiments by changing tax rates and exemption levels in closed and small open economy settings. By adjusting unified tax rates, we discuss the theoretical implications of optimal gift and estate tax rates on improving aggregate capital stock and expected lifetime utility. The welfare gains from higher and broader tax rate changes are measurable and significant in a model with revenue neutrality using an alternative tax rule of capital gain taxes, thereby leading to the possibility that these taxes can effectively provide additional resources for the government to level up disadvantaged populations.
ISSN
0254-3737
Language
Eng
URI
https://aurora.ajou.ac.kr/handle/2018.oak/35819
DOI
https://doi.org/10.22841/kerdoi.2023.39.2.003
Type
Article
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Yoo, Jae-in Image
Yoo, Jae-in유재인
Department of Financial Engineering
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