Bequests, estate taxes, and wealth distributions

Bossmann et al. (Journal of Public Economics 91:1247–1271, 2007) found that estate taxes reduce long-run wealth inequality. This result contrasts with the findings of the previous literature with idiosyncratic labor efficiency risk. We use a decomposition technique, developed by Davies (Journal of Labor Economics 4:538–559, 1986), to reinvestigate the impact of estate taxes on long-run wealth inequality. We find that the different results for estate taxes are due to different redistribution effects.