We are pleased to invite you to the seminar series on “Macroeconomics and Labor Markets“ organized by the Chair of Macroeconomics at the Friedrich-Alexander University Erlangen-Nuremberg, Prof. Merkl, the Chair of Global Governance and International Trade at the Friedrich-Alexander University Erlangen-Nuremberg, Prof. Moser, and the Competence Field Macroeconomics of the Institute for Employment Research (IAB). Researchers of both institutions, as well as national and international guests, present their current work at the intersection of labor- and macroeconomics.
The next seminar will be held on Tuesday, April 28, from 12:00 to 13:30 (German time).
It will take place in-person at WISO, room LG 4.154 (Lange Gasse 20, Nürnberg)
Online participation is possible via Zoom.
Klaus Wälde (Universität Mainz) will talk about “How to Make Tax Systems Regressive“ (joint work with Hoang Van Khieu).
Abstract:
Our paper proposes a novel mechanism underlying a regressive tax system. We study tax regressivity in a two-period model with intergenerational transfers through bequests, inter vivos gifts, and trust funds. Transfers are subject to piecewise linear tax schedules with exemptions and positive marginal rates above the allowance. Bequests and inter vivos gifts are perfect substitutes and occur late in life, while trust funds must be established early and involve a sizable fixed cost, making them accessible only to very wealthy individuals. We show that tax regressivity can arise only for the very and super rich – those who optimally use all three transfer channels. In particular, paying the fixed cost to establish a trust fund is a necessary condition for a declining average tax rate. Regressivity then emerges if and only if any one of the tax allowances falls below a threshold that depends on preferences and marginal tax rates. Our results highlight the central role of fixed-cost avoidance technologies in generating regressivity at the top of the wealth distribution.