nep-pub New Economics Papers
on Public Finance
Issue of 2005‒03‒06
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Tax Avoidance and Intra-Family Transfers By Nordblom, Katarina; Ohlsson, Henry
  2. Optimal Taxation of Gambling and Lotto By Walther Herbert

  1. By: Nordblom, Katarina (Department of Economics); Ohlsson, Henry (Department of Economics)
    Abstract: To what extent do people avoid taxes on intra-family transfers (bequests and gifts), and how would integration (unification) of the different transfers taxes affect tax avoidance? These issues are important for families and their welfare, as well as for governments and their possibilities of raising revenue from transfer taxes. In this paper we study the effects of transfer taxes on altruistic parents’ transfers to their children. Using a theoretical model we find that altruistic parents do not necessarily tax minimize. However, in some cases when they do, there is an infinitely large excess burden of a transfer tax. We also find that integration of transfer taxes reduces tax avoidance. All tax avoidance is eliminated with complete integration.
    Keywords: tax avoidance; bequests; inheritances; inter vivos gifts; altruism
    JEL: D10 D64 D91
    Date: 2005–02–15
  2. By: Walther Herbert (Department of Economics, Vienna University of Economics & B.A.)
    Abstract: Bets are analyzed using an intertemporal, state dependent expected utility model with non-linear probability weighting. Gamblers face a tradeoff between long-run expected utility from wealth and the short-run and fading emotional utility from gambling. Different wager tax bets, including lotto, are compared in various settings (fair bet versus monopoly). Reaction patterns are analyzed with respect to tax rates, the price of tickets, jackpots and the ’scale’ of the gamble. It is shown that optimal tax rates are higher for larger lotto communities, jackpots induce overshooting ’bubbles’ and taxes on lotto and fix-prize gambles are regressive.
    JEL: D H
    Date: 2005–02

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