Preferences for Inheritance Taxation in Europe: Experimental Evidence on Vertical Equity and Public Debt

Inheritance taxation is central to debates over wealth concentration, intergenerational mobility, and public finance, but there is ongoing debate about what tax rates the public considers appropriate. As ageing populations transfer more wealth across generations, understanding public preferences for inheritance taxation has become increasingly important.

In this paper, Edison Jakurti studies how people think inheritances should be taxed using a randomized factorial vignette experiment with 8,106 respondents from probability-based panel surveys across eleven European countries. Respondents evaluated hypothetical inheritance scenarios that varied in inheritance size, the heir’s income, and the level of public debt, enabling the estimation of the causal effects of these attributes on preferred inheritance tax rates.

KEY FINDINGS

• Preferred inheritance tax rates increase substantially with inheritance size, indicating broad support for progressive inheritance taxation.
• Respondents prefer higher tax rates when the heir has a higher income, suggesting that ability-to-pay considerations systematically shape preferences for inheritance taxation.
• A high level of public debt has only a small and statistically insignificant effect on preferred tax rates, implying limited responsiveness to fiscal need.
• Compared with respondents who do not expect to receive a substantial inheritance, prospective heirs do not differ significantly in their response to inheritance size, yet their preferred tax rates increase significantly more when public debt is high.
• Relative to respondents who are unlikely to leave an inheritance, prospective bequeathers (those likely to leave an inheritance) show a significantly weaker response at the intermediate transfer level, but no significant difference in their response at the largest inheritance size.
• Treatment responses vary more systematically with fairness perceptions than with self-interest: respondents who view wealth differences as unfairly large respond more strongly to inheritance size, below-average heir’s income, and public debt than those who consider wealth differences fair or too small.

AUTHOR

• Edison Jakurti, Abilene Christian University