A differential incidence analysis of a tax reform from an income tax to a consumption tax in the presence of bequests

This article studies the properties of a switch from an income tar to a consumption tar in the presence of bequests. The author shows that the consumption far will distort the bequest decision if benefits are fared at the consumption tar rate but not when bequests are exempt. It is possible that including bequests in the tax base under the consumption tax may reduce the incentive to save. The main benefit from reforming the tar system may arise from the switch away from the income tar and not in the move toward the consumption tar if bequests are taxed.