Free DP Download 31 January 2019: Salience of Inherited Wealth and the Support for Inheritance Taxation

Friday, February 1, 2019

Salience of Inherited Wealth and the Support for Inheritance Taxation
Spencer Bastani and Daniel Waldenström
CEPR DP No. 13484 | 24 January 2019

Telling people about the large aggregate importance of inherited wealth and its link to inequality of opportunity significantly increases support for inheritance taxation, according to a new CEPR study. Using a randomised experiment in a register-linked Swedish survey, the researchers find that the effect on attitudes is almost uniform across socio-economic groups.

One of the facts conveyed to the participants in the experiment is that approximately half of all household wealth in Sweden has been inherited. They were also informed that heirs with higher income receive larger bequests and that half of Sweden’s billionaires have inherited their fortunes. 

Changes in the perceived economic importance of inherited wealth and altered views on whether luck matters most for economic success appear to be the main driving factors behind the effect on attitudes to inheritance taxation. The findings suggest that the low salience of inherited wealth could be one explanation behind the relatively marginalised role of inheritance taxation in developed economies.

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