Authors: Twisha Asher, Luca Giangregorio, Salvatore Morelli, Manuel Schechtl, and Francesca Subioli
Institution: Stone Center Working Paper Series no. 129
Date: July 2026
Abstract:
This paper introduces a new harmonized global database on estate, inheritance, and gift (EIG) taxation, covering more than 170 countries, some with data going back to the 18th century, and all U.S. states from 2006. Despite substantial and persistent cross-country heterogeneity in tax design, we document a declining trend in the adoption and progressivity of EIG taxes since the 1980s. Using a two-way fixed effects (TWFE) framework complemented with an event-study approach, we find that a one percentage point increase in the top rate is associated with approximately 8% higher revenues between 1965 and 2022, with larger effects (9–17%) from 1995 through 2019. U.S. state-level estimates echo these results with a semi-elasticity of about 11%. An event-study analysis of 54 significant tax policy reforms shows no evidence of pre-existing differential trends and reveals dynamic effects: revenues decline by roughly 50% within four years following a cut of at least 10% in top rates, with symmetric effects for rate increases of similar proportion. Guided by a conceptual framework, we parse out the conditions that leads steady-state top wealth shares to fall when the average EIG tax rate increases. Using TWFE specifications with 5-, 10-, and 15-year lags, we find evidence consistent with the theoretical prediction. A one percentage point increase in the top marginal tax rate is associated with a 0.11-point decline in the Gini coefficient after 10 years, with consistent effects across top and bottom wealth shares.
