The Economics of Prepaying Wealth Transfer Tax

Trusts & Estates, Vol. 136, pp. 49-60, 1997

Emory Legal Studies Research Paper No. 12-194

27 Pages Posted: 21 Mar 2012 Last revised: 22 Jun 2012

See all articles by Jeffrey N. Pennell

Jeffrey N. Pennell

affiliation not provided to SSRN

R. Williamson

Alston & Bird LLP

Date Written: November 14, 2011

Abstract

A prevalent misconception is that deferral of tax is beneficial because the taxpayer may invest and reinvest the dollars that ultimately will pass to the government and make more money on those dollars than if payment was not deferred. This series of articles reveals that this “time-value-of-money” notion may be correct for income tax purposes but that it is exactly backward for all three of the Federal wealth transfer taxes (estate, gift, and generation-skipping). The truth is that (economically) the sooner a taxpayer pays each of these taxes, the better.

Suggested Citation

Pennell, Jeffrey N. and Williamson, R., The Economics of Prepaying Wealth Transfer Tax (November 14, 2011). Trusts & Estates, Vol. 136, pp. 49-60, 1997, Emory Legal Studies Research Paper No. 12-194, Available at SSRN: https://ssrn.com/abstract=1959487

Jeffrey N. Pennell (Contact Author)

affiliation not provided to SSRN ( email )

R. Williamson

Alston & Bird LLP ( email )

950 F Street, NW
1201 W. Peachtree Street
Washington, DC 20004-1404
United States

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