@article{FarhiWerning2010,
  title = {Progressive Estate Taxation},
  author = {Farhi, Emmanuel and Werning, Iv{\'a}n},
  year = {2010},
  journal = {Quarterly Journal of Economics},
  volume = {125},
  number = {2},
  pages = {635--673},
  doi = {10.1162/qjec.2010.125.2.635},
  url = {http://doi.org/10.1162/qjec.2010.125.2.635},
  abstract = {We present a model with altruistic parents and heterogeneous productivity. We derive two key properties for optimal estate taxation. First, the estate tax should be progressive, so that parents leaving a higher bequest face a lower net return on bequests. Second, marginal estate taxes should be negative, so that all parents face a marginal subsidy on bequests. Both properties can be implemented with a simple nonlinear tax on bequests, levied separately from the income tax. These results apply to other intergenerational transfers, such as educational investments, and are robust to endogenous fertility choices. Both estate or inheritance taxes can implement the optimal allocation, but we show that the inheritance tax has some advantages. Finally, when we impose an ad hoc constraint requiring marginal estate taxes to be nonnegative, the optimum features a zero tax up to an exemption level, and a progressive tax thereafter.},
  keywords = {{Estate, Inheritance, and Gift Taxes},Intergenerational Wealth}
}

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