NCPA - National Center for Policy Analysis

Estate Tax Affects Timing More Than Amount Given

February 19, 2001

The estate tax does more to affect the timing of giving among the wealthy than the amount, argues Bruce Bartlett.

  • Treasury Department economist David Joulfaian has found that those with lower amounts of taxable wealth tend to give much more to charity during their lives, while the very rich give much more at death.
  • In a sample of taxpayers, none with estates under $1 million made any charitable bequests whatsoever -- all, however, made substantial gifts while living.
  • At the opposite end of the wealth spectrum, those with estates larger than $100 million only gave 22 percent of their charitable gifts while living, giving 78 percent at death (see figure).

PriceWaterhouseCoopers estimates Bush's proposal to allow those who do not itemize to also deduct charitable contributions will increase giving enough to offset any net reduction in charitable giving by the wealthy due to estate tax repeal.

According to Joulfaian, most of the assets of the very wealthy go to setting up their own foundations, whereas the moderately wealthy are more inclined to give to churches, universities and other existing organizations.

In a recent book, "Writing Off Ideas," economist Randall Holcombe notes that these foundations often become controlled by leftists, who use them to promote ideas diametrically opposed to their founders. If abolition of the estate tax reduces such giving, society may actually be better off.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, February 19, 2001.


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