Thursday, May 6, 2010

Timing death with tax changes

One would think that the timing of death is largely exogenous. Think again, and it is not suicide or murder I am talking about. Estate taxation has probably the most volatile tax regulation among all taxes, as it can change dramatically from one year to the next. And these dramatic changes can encourage people to time their deaths.

Marcus Eliason and Henry Ohlsson look at Swedish data and notice that for deaths around the date of a taxation change, there is a notable asymmetry in the reported number of daily deaths, especially for those subject to estate taxation. Of course, it is unlikely that the true time of death was influenced, it is more likely some fudging on death reports happened. I usupect the same happens in other circumstances, like few people are officially born on July 4 in Iran, or May 1 in conservative circles in Europe.

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