Estate Taxes, Labor Supply, and Economic Efficiency

TitleEstate Taxes, Labor Supply, and Economic Efficiency
Publication TypeReport
Year of Publication2001
AuthorsHoltz-Eakin, D, Marples, D
InstitutionAmerican Council for Capital Formation Center for
Call Numberwp_2001/HoltzEakin.pdf
KeywordsAdult children, Employment and Labor Force, Public Policy

The key conclusions of the paper are that the federal estate tax reduces the labor supply and personal saving and increases the cost of capital (the hurdle rate) for new investment. In addition, entrepreneurs are particularly hard hit by the estate tax as they face higher average estate tax rates and higher capital costs for new investment than do other individuals. Finally, the federal estate tax causes distortions in household decision-making about work effort, saving, and investment (and thus loss of economic efficiency) that are even greater in size than those from other taxes on income from capital.

Endnote Keywords

Wills/Labor Supply/Taxes/behavioral distortions

Endnote ID


Citation Key5473