publication . Master thesis . 2014

The relative importance of inheritances in Norway

Johansson, Marianne Lefsaker;
Open Access English
  • Published: 01 Jan 2014
Abstract
In a very influential paper, Piketty (2011) finds that inherited wealth is of increasing importance in France. He describes a U-shaped pattern in the long-run development of inheritance flows. Two driving factors in this development are the relative ratio of wealth of the deceased to wealth of the living, and the wealth-income ratio. In periods with high economic growth, wealth of the past is weakened and inheritances as share of national income decreases. As soon as growth declines, however, the wealth inherited from one s parents and grandparents strengthens its significance and may end up dominating new wealth. This thesis concludes that Norway seems to be a ...
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2 Theoretical background 3 2.1 Why do people leave bequests? . . . . . . . . . . . . . . . . . . . . . . . . 3 2.2 Taxation of wealth transfers . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.2.1 Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.2.2 Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.2.3 Costs of taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.3 How do bequests develop over time? . . . . . . . . . . . . . . . . . . . . . . 10

3 The development of wealth and inheritances in Norway 11 3.1 Official inheritance statistics . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.2 Overview of Norwegian inheritance law and tax rules . . . . . . . . . . . . 13 3.3 Wealth statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3.4 Wealth statistics - micro data . . . . . . . . . . . . . . . . . . . . . . . . . 19

4 Examining inheritance tax planning behavior 22 4.1 Avoidance opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.2 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 4.2.1 Tax avoidance by converting assets . . . . . . . . . . . . . . . . . . 25 4.2.2 Reducing the inheritance tax base by spreading wealth . . . . . . . 30

5 Imputing aggregate inheritance as a share of income 30 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 5.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 5.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

1 Average net wealth and wealth assets for the bottom 95 percent of the wealth distribution in 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2 Average net wealth and wealth assets for the top 5 percent of the wealth distribution in 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3 Households' wealth and income 1998 - 2012 . . . . . . . . . . . . . . . . . 34

4 Inheritance flows Norway 1998 - 2012 . . . . . . . . . . . . . . . . . . . . . 36

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