Brief Do Estate and Inheritance Taxes Affect Entrepreneurship?
Leonard E. Burman, Robert McClelland, Chenxi Lu
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Despite its relatively small role in the federal taxation system—accounting for less than 1 percent of revenues—the estate and gift tax is controversial. This brief surveys research on the effect of estate and inheritance taxes on entrepreneurship and presents new evidence. We find that receiving an inheritance increases the likelihood of owning and managing a business. The prospect of leaving an estate subject to taxation may reduce the likelihood of continued self-employment by encouraging retirement.
Research Areas Wealth and financial well-being Taxes and budgets
Tags Asset and debts Employment and income data Individual taxes
Policy Centers Urban-Brookings Tax Policy Center