NCPA - National Center for Policy Analysis

Charities Ponder Implications Of Estate Tax Repeal

August 10, 2000

U.S. charities don't quite know what to say about repeal of the estate tax. On the one hand, they don't want to offend affluent donors by fighting its repeal. On the other hand, they want to keep on collecting the donations the estate tax encourages. So far the organizations have done next to nothing to fight repeal -- which has passed both houses of Congress.

Observers point out that a number of wealthy individuals who probably support repeal sit on the boards of charities. That may help explain why the organizations have remained silent.

The wealthiest estates face the highest estate-tax rates and give, by far, the most to charity.

  • In 1997, some 19,000 estates with a gross size of $600,000 to $1 million contributed about $91 million to charities.
  • But just 329 estates in the $20 million or more category gave away nearly $7.5 billion.
  • Altogether, nearly 43,000 estates listed nearly $10 billion in charitable deductions in 1997.
  • Educational institutions and private foundations get the biggest share of bequests, according to a 1999 Internal Revenue Service study of donors who died in 1995.

The Treasury Department estimates repeal would cut charitable contributions by $5 billion to $6 billion a year; but a recent study by charitable groups estimated bequests would have dropped $3 billion, or 35 percent, to $5.5 billion in 1996 if the estate tax had been repealed.

Source: John D. McKinnon, "Charity Groups Are Torn on Estate-Tax Repeal: Worried Over Effects, Wary of Offending Donors," Wall Street Journal, August 10, 2000.

 

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