86th International Atlantic Economic Conference

October 11 - 14, 2018 | New York, USA

Do Spaniards vote with their feet? The case of the Spanish inheritance tax

Saturday, 13 October 2018: 9:00 AM
Miriam Marcen, Ph.D. , Economic Analysis, University of Zaragoza, Zaragoza, Spain
Rafael González-Val, Ph. D. , Análisis Económico, University of Zaragoza, Zaragoza, Spain
This paper studies whether Spanish individuals move from one region to another because of the huge regional differences in the Inheritance Tax or if they are driven by alternative motives. This is an important issue in Spain since the Inheritance Tax is a regional tax. Regions set their regulations in terms of tax rates and exemptions. In some regions the acceptance of an inheritance is not very costly, but in others people cannot afford the Inheritance Tax and are therefore unable to accept the inheritance. In our work, we analyze the effect that the interregional disparities in the Inheritance Tax have on the borders between regions. For this purpose, data from the Municipal Register (Padrón Municipal) for more than 15 years (1996-2011) and several Censuses from 1991 to 2011 (National Institute of Statistics) are used to estimate econometric models in which the endogenous variable is the growth rate of the population at the municipal level and the main explanatory variable is a variable that considers the spatial differences in the Inheritance Tax, assuming two scenarios. The first is that the municipality belongs to a region with a lower marginal tax rate and the second is a region with a lower marginal tax rate than its neighboring region (geographically). The samples used also allow us to explore the behavior of the population by age group and to examine if the possible effect is asymmetric, affecting individuals more. This study contributes to a very scarce literature, and has social, economic, and demographic consequences.