Research On Economic And Social Effect Of Estate Tax

There’s an old adage that you can’t escape death and taxes,but unfortunately for some family businesses,the two go hand in hand. In a long drown-out various disputes about family firms’growth, survival, development and entrepreneurial energies, a largish group of decision-makers and Medium-Small family business owner always stick to the traditional thinkings,that is"estate tax is blow for the economic prosperity, freedom and independence, the enterprise and innovation". However,in recent years, more and more researchers believe that criticism about estate tax’s effect obviously exaggerated,or fundamentally wrong. Interestingly enough, a subordinate tax only raised0.68%of the tax revenue for America in2013Fiscal year is controversial for its potential impact on the accumulation of capital, intergenerational wealth flow,and succession in family business, so it becomes the origin of thesis about study on the estate tax effect based on the perspective of family enterprises.Serious differentiation analysis of the estate tax effect indicates that at least two key issues failed to clarify in the study of this problem. The one is the lacks of analytical framework,the other is the lacks of empirical evidence. Based on the above observation and thinking, This thesis puts forward the following problems to be researched:(1) Scope and dimension of estate tax on family enterprise (2) Effect of path and the influence degree of inheritance tax in family firm’s behavior decision (3) The evaluation and selection of estate tax based on the Chinese conditions. Taking the logical positivism as the starting point of analysis, this paper adopts the way of combining normative studies with empirical studies, combining document research with case study,combining variable inspection with general equilibrium analysis. This paper also focuses on the construction of the analysis framework of estate tax effect, the theoretical analysis of behavioral decision,and an empirical test of tax effect based on the perspective of family enterprises. All the effort is to rejudge according to the tax characteristics of the conclusion of the study,thus to provide suggestion choice for domestic on the estate tax policy.The main conclusion of the study can be simply summarized as follows.(1) Role of the field of inheritance tax effect can be attributed to the economic effect and social effect, specifically defined in four key dimensions about the structure of property rights, decision on investment, decision on succession,and the act of charity.(2) Estate tax is explicit incentives promote family enterprise property structure adjustment, affectting investment decision and family business succession.However,because of the the presence of bequest motives and the complexity of family formation,the economic effect of the estate tax will finally reflect in multidimensional influence、dynamic changes in the process,and the uncertainty of the results.No matter which dimension based on,its effect are divergence rather than convergence.(3) Tax exemption for charitable giving in the current system of estate tax equivalents to giving implicit subsidies for family business owner’s philanthropy.It will encourage family business owners to increase charitable expenditures.Different from economic effect of estate tax,the social effect of estate tax showed positive and single dimension,and convergences to charity behavior of internal drive,as well as spontaneous equalization of wealth and income distribution.This conclusion proves that the essence of estate tax maintain social fairness and intergenerational justice.However,data verification and empirical analysis is not significant to support this conclusion,so,it can be inferred that the charitable effect and social effect of estate tax is magnified.The possible theoretical innovations can be summarized as follows.(1)Borrowing the analytical framework of the traditional welfare economics and the theory of Optimal Taxation, a comprehensive study on the tax effect of estate tax based on the family firms has be conducted.Finally,the effect of estate tax is locked to the two aspects, economic effect and social effect. A analytical framework of estate tax effect based on the family firm perspective has be constructed from the structure of property rights, decision on investment, decision on succession,and the act of charity.(2) The theoretical analysis has to be carried out for the correlation of the estate tax and family business behavior under the strict assumptions. According to this,the paper derives a certain number of propositions and inferences,which effectively makes up and enriches the technical methods, research ideas and research perspectives about estate tax effect.(3) Under the difficult situations of lacks of empirical data and estate tax not be levied at home, this paper exploit and design of a natural experiment about the effect of estate tax on family enterprise behavior decision to construct an econometric model to empirically examine all theoretical propositions derived,and estimate the influence degree,which is made possible by the Hong Kong SAR government’s decision to abolish its estate tax in2006.(4) This paper also puts forward combination theory of the estate tax effect, analyzes the necessity and feasibility of Chinese if and when the imposition of estate tax from the near term and long term, respectively, puts forward some enlightenment and suggestions about the choice of domestic estate tax policy.