Estate Tax Reform: Issues and Options

16 Pages Posted: 26 Dec 2008 Last revised: 4 Mar 2009

Date Written: January 2, 2009


The upcoming one-year repeal of the federal estate tax creates an opportunity to reconsider the taxation of wealth transfers. This paper argues that federal wealth transfer taxes should be retained and potentially expanded. The estate tax contributes importantly to the progressivity of the tax system as a whole by partially offsetting the tax advantages accorded to inherited income among high-income households. It also appears to be a relatively efficient source of revenue. Nevertheless, the estate tax system could be improved by adopting a package of simplification measures or, more fundamentally, by replacing it with an inheritance tax.

Keywords: estate tax, wealth transfer, gift, bequest, inheritance, inheritance tax, income inequality, intergenerational economic mobility

JEL Classification: D30, D31, D39, D61, D63, D64, H20, H21, H22, H23, H24, H31, K34

Suggested Citation

Batchelder, Lily L., Estate Tax Reform: Issues and Options (January 2, 2009). Tax Notes, February 2, 2009, NYU Law and Economics Research Paper No. 09-02, Available at SSRN:

Lily L. Batchelder (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-992-8156 (Phone)

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