Taxes, frictions and asset shifting - when Swedes disinherited themselves

Arbeitspapier

We study tax-driven intergenerational asset shifting using a salient tax discontinuity and rich data on both donors and recipients. When the Swedish inheritance tax was in place, heirs could lower their inheritance tax bills by passing on part of the inheritance to their children. We present evidence on strong and precise responses to this incentive. We quantify optimization frictions, and we show that they are small in this setting. Both intensive and extensive margin policy responses can be rationalized by a simple model in which agents face small frictions at the extensive margin. Descriptive evidence suggests that the policy response is associated with the abundant supply of cheap legal advice on tax planning.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2019:6

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Tax Evasion and Avoidance
• Subject: tax avoidance ; tax rate elasticity ; inheritance taxation ; inter vivos gifts

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Escobar, Sebastian ; Ohlsson, Henry ; Selin, Håkan
• Event: Veröffentlichung
• (who): Institute for Evaluation of Labour Market and Education Policy (IFAU)
• (where): Uppsala
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/201470
• Last update: 10.03.2025, 11:41 AM CET