Taxing the Great Wealth Transfer

• In Event: Taxing Intergenerational Wealth Transfers

Abstract

Over the next several decades, the U.S. will experience the largest flows of intergenerational transfers of wealth in modern history. Taxing these flows judiciously could raise revenue and improve the tax system, but transfer taxes have been eviscerated in recent years. Using an innovative methodology, we examine the revenue and distributional effects of reforming the estate tax, taxing capital gains at death, and converting the estate tax to an inheritance tax. We conclude that inheritance taxes can raise more revenue and be more progressive than the existing estate tax and have other advantages, such as broadening the income tax base.

Authors

• John Sabelhaus, Brookings Institution

• William Gale, Brookings Institution

• Oliver Hall, Brookings Institution