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

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.

ISSN

0732 507X

Additional Information

Metropolitan studies program series occasional paper no.194

Source

Local Input

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

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