Wealth Transfer Tax and Wealth Inequality

Wealth Transfer Tax and Wealth Inequality | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Wealth Transfer Tax and Wealth Inequality Yi-Ju Hung, Da-Kai Wu This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6394395/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study investigates the impact of wealth transfer tax on wealth inequality and finds a negative association, leveraging the 2009 tax cut in Taiwan’s estate and gift taxes. We implement the synthetic control method to estimate the tax cut’s causal impact on inequality. The estate tax cut enlarges the inequality; the top one percent’s wealth share rises 0.690 to 2.189 percentage points in six years after the tax reform. The tax cut-induced expanding inheritance inequality supports our findings. We also show that changes in tax avoidance behaviors may explain the immediate and a part of the long-run impacts estimated on inequality. JEL Classification: D31, E21, H23 Estate and gift taxes Wealth inequality Synthetic control method Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6394395","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":439525670,"identity":"9a7af475-fba2-48da-a54b-741d1de9eab7","order_by":0,"name":"Yi-Ju Hung","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA9UlEQVRIie2PsWoCQRCGdxm4a1bTeliYRzixkkTvVfY4sNIiTeoVYW1O61j5FtZ7TJFGtA1swE7bs5NgkV2FdK5XBtyvmH8G5mMYQjye/wgQDjafwqlSpWmCsKoS5eu0+LAKVDpkiL94B9nf6CD+JPvmm/zuC8U5vv6sWnUgtDwOHQqSQXMh99lYFApHc92WQCBarO4oNYkZUMFxlGtqlABqVRTzdYzdXCeVlT4LbH/S6V0lQpK9sA3yBmO8mAmdSaAT5y/17TrV7B2TZHfA8nTWveV0UpRHh/KsGLeZClupvFRxe9/QEqGymVzHs3PZ4/F4HpRfERJWWmY87dcAAAAASUVORK5CYII=","orcid":"https://orcid.org/0009-0001-3950-827X","institution":"National Chung Cheng University","correspondingAuthor":true,"prefix":"","firstName":"Yi-Ju","middleName":"","lastName":"Hung","suffix":""},{"id":439525671,"identity":"bef2f93d-d163-4b0a-a6e5-c2fb8335b845","order_by":1,"name":"Da-Kai Wu","email":"","orcid":"","institution":"Feng Chia University","correspondingAuthor":false,"prefix":"","firstName":"Da-Kai","middleName":"","lastName":"Wu","suffix":""}],"badges":[],"createdAt":"2025-04-07 12:47:00","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-6394395/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6394395/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":80117565,"identity":"58b9a78e-6a0d-405e-9a27-935c482523e5","added_by":"auto","created_at":"2025-04-08 06:48:30","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1146213,"visible":true,"origin":"","legend":"","description":"","filename":"HungWuestatetax2025.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6394395/v1_covered_d88ace8d-f53f-4620-97b1-407958781f08.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eWealth Transfer Tax and Wealth Inequality\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Estate and gift taxes, Wealth inequality, Synthetic control method","lastPublishedDoi":"10.21203/rs.3.rs-6394395/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6394395/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis study investigates the impact of wealth transfer tax on wealth inequality and finds a negative association, leveraging the 2009 tax cut in Taiwan’s estate and gift taxes. We implement the synthetic control method to estimate the tax cut’s causal impact on inequality. The estate tax cut enlarges the inequality; the top one percent’s wealth share rises 0.690 to 2.189 percentage points in six years after the tax reform. The tax cut-induced expanding inheritance inequality supports our findings. We also show that changes in tax avoidance behaviors may explain the immediate and a part of the long-run impacts estimated on inequality.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eJEL Classification:\u003c/strong\u003e D31, E21, H23\u003c/p\u003e","manuscriptTitle":"Wealth Transfer Tax and Wealth Inequality","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-04-08 06:40:23","doi":"10.21203/rs.3.rs-6394395/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"1dac1725-11db-440c-8263-8670f33da572","owner":[],"postedDate":"April 8th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[],"tags":[],"updatedAt":"2025-04-08T06:40:23+00:00","versionOfRecord":[],"versionCreatedAt":"2025-04-08 06:40:23","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-6394395","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-6394395","identity":"rs-6394395","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}