TY - JOUR
T1 - Estate taxes, life insurance, and small business
AU - Holtz-Eakin, Douglas
AU - Phillips, John W.R.
AU - Rosen, Harvey S.
N1 - Copyright:
Copyright 2005 Elsevier Science B.V., Amsterdam. All rights reserved.
PY - 2001/2
Y1 - 2001/2
N2 - Critics argue that the estate tax prevents the owners of family businesses from passing their enterprises to heirs because it is difficult to pay estate taxes without liquidating the business. Why don't owners purchase enough life insurance to meet their estate tax liabilities? We examine whether and how people use life insurance to deal with the estate tax. We find that, ceteris paribus, business owners purchase more life insurance than do other individuals. However, on the margin, their insurance purchases are less responsive to estate tax considerations, and they are less likely to have the wherewithal to meet estate tax liabilities out of liquid assets plus insurance.
AB - Critics argue that the estate tax prevents the owners of family businesses from passing their enterprises to heirs because it is difficult to pay estate taxes without liquidating the business. Why don't owners purchase enough life insurance to meet their estate tax liabilities? We examine whether and how people use life insurance to deal with the estate tax. We find that, ceteris paribus, business owners purchase more life insurance than do other individuals. However, on the margin, their insurance purchases are less responsive to estate tax considerations, and they are less likely to have the wherewithal to meet estate tax liabilities out of liquid assets plus insurance.
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U2 - 10.1162/003465301750160036
DO - 10.1162/003465301750160036
M3 - Article
AN - SCOPUS:0035586677
VL - 83
SP - 52
EP - 63
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
SN - 0034-6535
IS - 1
ER -