The federal estate tax expired December 31, 2009 after Congress was unable to reach an agreement on either a permanent or short-term extension. The tax will be re-instated on January 1, 2011, with a $1 million exemption and a 55% tax on amounts over the exemption unless Congress takes action to change the law.
The Statutory Pay-As-You-Go Act of 2010 (PL 111-139), enacted in February 2010, requires that any changes to the estate tax beyond a two-year extension of 2009 law ($3.5 million exemption, 45% tax rate) must be fully offset by cuts in programs or by revenue increases.
Independent Sector is calling on Congress to preserve this critical tax incentive for philanthropic giving by ensuring that any modifications to the tax do not raise the exemption level or lower the tax rates beyond the 2009 law. IS recently signed onto a coalition letter of nearly 75 estate tax advocates in support of the Responsible Estate Tax Act (S.3533) introduced by Senator Bernie Sanders (I-VT) that would restore the estate tax at the 2009 exemption levels with progressive tax rates on larger estates, including a 10% surtax on the wealthiest estates.
Why it Matters
The estate tax has been a critical incentive for people of great wealth to give back through their estates to support the work of charitable organizations that improve the quality of life in communities throughout the world. Giving through charitable bequests totaled $28.4 billion in 2008 (9% of total giving) and contributions from philanthropic foundations, many of which were created through bequests, accounted for another $32.65 billion.
The estate tax is also a vital source of revenue for the federal government, helping to fund a variety of federal programs and services, including those that are delivered through or in partnership with nonprofit organizations, vital to the people served by the nonprofit community. Repeal of the estate tax would result in the loss of over $1 trillion in tax revenues for federal government over the next ten years.
