Inheritance and gift taxes are due in the first case for the transfer of assets and rights after the death of the holder, in the second case for a gratuitous transfer of property and rights.
For at least seventy years revenue of inheritance tax has been steadily declining in OECD countries: this trend is explained by a different composition of wealth, with the increasing role of labor income at the expense of the one from the property. In Italy the level of revenue is particularly moderate and stable over time mainly due to tax evasion and avoidance; currently inheritance tax revenue is close to historic lows.
The legislative process of this tax in Italy was very complicated in recent years: was reduced in 2000 by the government of the center-left with the law n. 342/2000 and was entirely abolished in 2001 by the government of the center-right with the law n. 383/2001; the tax was then restored in 2006 by the government of the center-left with the law n. 286/2006 with the presence of a franchise to hit only the large estates. The succession and donation are subject to the following rates: 4%, property donated to the spouses and relatives in a straight line, the total net value exceeding, for each beneficiary, 1 million euro; 6% for goods donated to the brothers and sisters, the total net value exceeding, for each beneficiary, 100 thousand euro; 6% for goods donated to other relatives up to the fourth degree and relatives in straight line, as well as related in the collateral line within the third degree; 8% for goods donated to other subjects.
From a study done by lavoce.info, the data provided by the Bank of Italy suggest that the abolition of inheritance tax which took place in Italy between 1999 and 2001 has increased intergenerational transfers. In fact, the effect of the abolition of inheritance tax has increased above the proportion of donors (about 2 percent). In particular, the propensity to transfer property inheritance has increased for everyone, but the gap between the relatively richer households and the rest of the population has expanded significantly.
The figure below shows the percentage of households receiving a donation or succession, distinguished according to whether the parents are rich (the curve joining the points marked with the letter H) or poor (the curve joining the points marked with the letter L). In the case of wealthy parents willingness to intergenerational transfers is higher, both before and after the abolition of inheritance taxes. Before the reduction, the percentage of rich families who leaves a legacy is about 32%, that of poor households by 26%. After the reform, one of the top percentage rises to 40% among the latter up to 31%. The figure thus suggests that the gap between rich and poor families has widened after the reform. The abolition of inheritance tax us then handed a country more unequal and more rigid, worrying for a country with a low level of social mobility.
Finally an article Krugman in the New York Times offers an interesting point of view, emphasizing that the reduction of this type of tax burdens in the short term the problem of the concentration of wealth in a dynastic form in a society that is increasingly unequal, while in the long term to encourage the creation of greater capital reserves, favoring the incomes of workers (something that would happen anyway in the case of redistribution in the society of this tax revenue).