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
10-1998
Language
English
Series
Metropolitan Studies Program Series
Disciplines
Economic Policy | Economics | Public Affairs, Public Policy and Public Administration | Public Policy
ISSN
0732 507X
Recommended Citation
Holtz-Eakin, Douglas; Phillips, John W.; and Rosen, Harvey S., "Estate Taxes, Life Insurance, and Small Business" (1998). Center for Policy Research. 439.
https://surface.syr.edu/cpr/439
Source
Local Input
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Included in
Economic Policy Commons, Economics Commons, Public Policy Commons
Additional Information
Metropolitan studies program series occasional paper no.194