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IZA Discussion Paper No. 11120
October 2017
Wealth Transfers and Tax Planning: Evidence for the German Bequest Tax

The rising importance of bequests as a source of personal income lead to renewed interest in the taxation of wealth transfers. Empirical evidence on distortionary effects of bequest taxation is relatively scarce. On the basis of administrative data for Germany, this paper assesses the extent to which taxable bequests are targeted to the tax code. I investigate bunching at discrete jumps in the marginal tax rate. While there is evidence for tax planning in case of inter-vivo gifts, inheritances do not exhibit bunching. Further heterogeneity analyses demonstrate that tax planning is highest for gifts between close relatives. While the overall tax base responsiveness is rather low, the findings suggest that bequest tax planning almost exclusively occurs for donors rather than recipients of wealth transfers. Beyond, tax planning is more prevalent for close relatives and large estates.

Kommunikation
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Netzwerkkoordination
Christina Gathmann
christina.gathmann@liser.lu

Das IZA@LISER-Netzwerk ist eine weltweite Gemeinschaft für exzellente Forschung in der Arbeitsmarktökonomie und angrenzenden Fachgebieten. Nach dem Wechsel von Bonn wird das Netzwerk nun am Luxembourg Institute of Socio-Economic Research (LISER) koordiniert.

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