Does Past Experience Affect Future Behavior? Evidence from Estate Tax Avoidance Behavior

Abstract

Unlike most other taxes that are levied on most individuals or corporations, the estate tax is levied on a small number of very large estates. This divides taxpayers sharply into two groups -- those who have experience of having paid it before and those who don'’t. Given the nature and the rate of the estate tax, the experience of having paid it is probably neither negligible nor forgettable. In this paper, using data from the Survey of Consumer Finances 2007 and a regression discontinuity design, I fi nd evidence that those who have experience of having paid the estate tax at their parent’s death are more actively engaged in the estate tax avoidance behavior for their children.