Tax Avoidance And Intra-Family Transfers

To what extent do people avoid taxes on intra-family transfers (be- quests and gifts), and how would integration (unification) of the dif- ferent transfers taxes affect tax avoidance? These issues are important for families and their welfare, as well as for governments and their pos- sibilities of raising revenue from transfer taxes. In this paper we study the effects of transfer taxes on altruistic parents’ transfers to their chil- dren. 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