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It is in general not optimal to make education expenses fully tax deductible and the optimal education subsidy, income tax and bequest tax can, but need not, move together at the optimum.
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This paper considers dynamic optimal income, education, and bequest taxes in a Barro-Becker dynastic setup.
Spouses may give each other unlimited bequests tax free, and they are permitted to file joint tax returns.
Cantonal bequest-tax data might allow researchers to track the evolution not only of the volume of inheritances but also of the distribution across bequest sizes and heir categories.
How much taxation could affect this inequality, and which kind of taxes, taxes on bequests, taxes on income.
Such trusts are perfectly legal, and many other rich people use them to shelter their gifts and bequests from taxes.
Estate planning is no longer just about bequests and taxes.
Finally, I solve for the fully unrestricted policies and show that, if education is highly complementary to children's ability, it is optimal to distort parents' trade-off between education and bequests and to tax education investments relative to bequests.
For instance, if you read this magazine you know that it is convenient to live in Hong Kong or Portugal because of low income taxes, but you should not plan to die there because your bequest would be heavily taxed {see our Investment Guide}.
Under full information, the first-best can be decentralized by a linear subsidy on informal aid, a linear tax on bequests when the parent is dependent and state specific lump-sum transfers which provide insurance.
Both Mr. Trump's and Mr. Ryan's plans eliminate a deep-rooted Republican bête noire, the estate tax on bequests to heirs.
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