Experts: Inheritance impacts employment
The Economic Council of Denmark, also known as the ‘economic sages,’ report that lowering inheritance tax could result in fewer people working. Analyzing data from 2010 to 2021, individuals who received an inheritance tended to work less and saw a wage income reduction of 1.5% on average. This effect varied with the size of the inheritance; those inheriting over 600,000 kroner had a 3% reduction in wages. The study also suggests that increasing the inheritance tax would conversely increase labor supply, with an estimated 250 more people working for every additional billion kroner in taxes. As of 2021, Denmark’s inheritance tax brought in 6.7 billion kroner, with rates differing between immediate family members and others. The Council advises including labor supply effects in future economic assessments of inheritance law changes.