This article brings together several strands in the literature to provide a framework for assessing the role of wealth transfer taxes. It examines the theoretical rationale for these taxes, discusses data on the distribution and accumulation of wealth, and reviews the experience of the United States and other countries under their existing systems. Although wealth is highly concentrated in industrial countries and the life-cycle framework indicates that wealth transfers should be taxed, this paper finds that countries do little through their tax systems to affect wealth concentration. Because a substantial portion of the existing stock of wealth is inherited, these taxes could have significant equalizing effects. Thus, a serious reassessment of wealth transfer taxes is warranted.
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Aaron et al. (1992) studied this question.
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