Description/Abstract
One criticism of the estate tax is that it prevents the owners of family businesses from passing their enterprises onto their children. The problem is that it may be difficult to pay estate taxes without liquidating the business. A natural question is why individuals with such concerns do not purchase enough life insurance to meet their estate tax liabilities. This paper examines whether and how people use life insurance to deal with the estate tax. We find that, other things being the same, business owners purchase more life insurance than other individuals. However, on the margin, their insurance purchases are less responsive to estate tax considerations and they are less likely to have the wherewithal to meet estate tax liabilities out of liquid assets plus insurance.
Document Type
Working Paper
Date
1999
Keywords
personal income, nonbusiness taxes, taxation, estate tax, life insurance, small businesses
Language
English
Series
Working Papers Series
Disciplines
Taxation
Recommended Citation
Holtz-Eakin, Douglas; Phillips, John; and Rosen, Harvey, "Estate Taxes, Life Insurance, and Small Business" (1999). Center for Policy Research. 149.
https://surface.syr.edu/cpr/149
Source
Metadata from RePEc
Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.
Additional Information
Harvest from RePEc at http://repec.org