Research

2022- "Inheritance taxation with agents differing in altruism" [joint with Pascal Belan], Revue d'économie politique, 2022/5 (Vol. 132), pp. 793 à 833

We analyze a tax reform that consists in a shift from capital income tax towards inheritance tax, in a second-best world where the government needs to implement distortive taxes in order to finance public spendings. To do so, we consider a two-period overlapping generation model with rational altruism à la Barro, where the population consists of two types of dynasties that differ in altruism. With inelastic labor supply, the tax reform increases welfare of the less altruistic dynasties, but decreases welfare of the most altruistic ones. We then extend the model introducing elastic labor supply and home production, considering that the old can transfer time to their offspring to help them in their domestic tasks. In steady state, the tax reform is Pareto-improving if, simultaneously, initial net wages are low and substitutability between consumption of market goods and time for home production is high. Under these sufficient conditions, the tax reform leads to an increase in labor supply that allows for efficiency gains. A numerical example illustrates that the tax reform also achieves a Pareto improvement along the transitional dynamics.

Keywords: altruism, bequests, time transfers, inheritance tax, redistribution.

JEL codes: D64, H22, H24, J22.

2020- "Inheritance taxation in a model with intergenerational time transfers" [joint with Pascal Belan], The B.E. Journal of Economic Analysis and Policy, 20(1):1935-1682.

• Thema working paper, online version, 2018-05, september 2019 (lastest version).

We consider a two-period overlapping generation model with rational altruism à la Barro, where time transfers and bequests are available to parents. Starting from a steady state where public spendings are financed through taxation on capital income and labor income, we analyze a tax reform that consists in a shift of the tax burden from capital income tax towards inheritance tax. In the standard Barro model with no time transfer and inelastic labor supply, such a policy decreases steady-state welfare. In our setting, inheritance tax modifies parent's trade-off between time transfers and bequests. We identify situations where the tax reform increases welfare for all generations. Welfare improvement mainly depends on the magnitude of the effect of higher time transfers on the labor supply of the young.

Keywords: family transfers, altruism, time transfers, inheritance tax.

JEL codes: D64, H22, H24, J22.

2022- "Optimum linear taxes in an olg model with rational altruism" [joint with Pascal Belan]

We analyze optimal linear taxation policy in an overlapping generation model with rational altruism. Heterogeneity in preferences and labor productivity leads to the possibility for some parents to be constrained or not on the bequest they leave to their offsprings. The government has to finance public expenditures with linear taxes on labor and capital income, inheritance and consumption, as well as public debt and uniform lump-sum taxes. We first identify policies that allow to decentralize a first-best allocation without uniform lump-sum taxes, and discuss the role of the consumption tax in this matter. Then, assuming that the government has some redistributive motive, we analyze the optimal second-best policy. We highlight the respective role of inheritance tax and consumption tax in the decentralization of the second-best optimum.

Keywords: inheritance tax, capital income tax, consumption tax, altruism.

JEL codes: D64, H21.