Age-related taxation of bequests in the presence of a dependency risk

This article examines the optimal linear taxation of bequests when individuals differ in wages as well as in their risks of both mortality and old-age dependence. We show that, if the government is utilitarian, whether the taxation of early bequests should be given priority over the taxation of late bequests depends on the magnitude of insurance and redistributive concerns. While the efficiency concern unambiguously recommends taxation of early bequests, redistributive concerns yield ambiguous results.