One of the arguments against inheritance tax is that it lowers the incentive to work for those close to retirement who have earnt enough money to be comfortable in old age.

How much is this offset by the lower incentive to work (e.g. towards a mortgage or for greater financial security) for those who expect to receive the inheritance? Is there any empirical evidence for such an effect, if it exists?

  • $\begingroup$ 1) This argument seems to make no sense to begin with. What possible alternative tax is there that doesn't have more or less the same implicit disincentive effect on labor? 2) On the other hand, the argument about disincentive effects on the recipients is completely bogus, because it is an income effect, not a substitution effect, so irrelevant to the welfare calculations. $\endgroup$ Jan 25 '16 at 0:00
  • $\begingroup$ I guess you mean "offset by the higher/stronger incentive to work" for those that receive the inheritance? $\endgroup$ Feb 18 '16 at 12:16
  • $\begingroup$ @StevenLandsburg doesn't the size of the inheritance, and the proportional size of the tax, make this different to most other forms of tax? $\endgroup$ Feb 18 '16 at 14:25
  • $\begingroup$ @polyphant: I don't understand the question. Of course every tax is different in some ways from every other tax. Why would these particular differences be relevant to the question you asked? $\endgroup$ Feb 18 '16 at 16:28

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