En collaboration avec Marc Fleurbaey, Marie-Louise Leroux, Pierre Pestieaux et Stephane Zuber.
Abstract: While little agreement exists regarding the taxation of bequests in gen-eral, there is a widely held view that accidental bequests should be subject to a con scatory tax. We reexamine the optimal taxation of accidental bequests by introducing a concern for compensating individuals for a pre-mature death. Using a lifecycle model where individuals care about what they leave to their offspring, we show that, whereas the conventional 100 % tax view holds under the utilitarian criterion, it does not hold under the ex post egalitarian criterion (which gives priority to the short-lived). In order to compensate the short-lived, it is optimal not to tax, but to subsidize accidental bequests. The robustness of those results is studied in a dynamic OLG model of wealth accumulation. Finally, we provide a second-best egalitarian argument for taxing (total) bequests at a rate that is increasing with the age of the deceased.
Keywords: mortality, accidental bequests, optimal taxation, compen-sation, OLG models.
JEL classi cation codes: D63, D64, D91, H31, J10.