The death of the death tax: Revenue, redistribution, and inheritance taxation, 1750-2015

• Robert Schuman Centre for Advanced Studies

This seminar will examine why countries repeal the inheritance tax at a time of acute concern about income and wealth inequality.

Why do countries repeal the inheritance tax? From a median voter perspective, the demise of a highly redistributive tax is puzzling at a time of acute concern about income and wealth inequality. We use a novel dataset on inheritance tax introductions and repeals worldwide to investigate this puzzle. We find that revenue requirements were the main driver of historical inheritance tax introductions, not redistributive concerns. We conjecture that revenue requirements are also the main determinant of repeal risks: the inheritance tax is resilient as long as it is central to the national revenue system. Without a clear revenue purpose, its survival comes to depend mainly on its redistributive features. Redistribution, however, is essentially contested and open to challenge. The evidence is broadly in line with our conjecture: the inheritance tax falls as other more buoyant taxes rise. It also shows that democratic governments are less likely to repeal the tax than non-democratic governments. In contrast to a strong current of the literature which considers the demise of the inheritance tax as a sign of democratic failure, we find that democracy is a better guardian of the redistributive interests of the median voter than its non-democratic alternatives.

Paper presented by Philipp Genschel, Joint Chair Professor at Schuman Centre and SPS Department and Laura Seelkopf, Assistant Professor of International Political Economy at the School of Economics and Political Science, University of St. Gallen.

This seminar takes place online. Please register to receive a Zoom link.