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Public Policy
Estate Tax as a Charitable Giving Incentive
- The federal estate tax provides strong incentives to people to donate from their estates to charitable organizations and thereby encourages the donation of significant revenues to support services and programs that are vital to sustaining healthy communities and the well-being of Americans of all ages.
- The Congressional Budget Office* found that the estate tax leads affluent individuals to donate far more than they otherwise would, because such donations sharply reduce estate tax liability.
- These contributions are needed more than ever in these difficult economic times.
- Giving through charitable bequests totaled $22.6 billion in 2008 – 7% of total giving and contributions from philanthropic foundations, many of which were created through bequests accounted for another $32.65 billion in 2008.
- Any further weakening or repeal of the estate tax from 2009 levels would diminish an important source of revenue for the charitable community by making charitable bequests more expensive, thereby reducing contributions and diminishing our ability to address the needs of the individuals and communities we serve.
Estate Tax as a Source of Federal Revenue
- Extending the estate tax at 2009 levels would generate an estimated $515 billion in federal revenues over ten years.
- Fewer than 3 in every 1,000 estates are expected to be subject to the estate tax this year.
- If the estate tax were repealed after 2009, the federal government would stand to lose an estimated $1 trillion in tax revenue over a ten year period.
- The reduction in federal revenues would likely result in further cuts in federally funded programs vital to the people served by the nonprofit community, including education, the arts, health care, and especially aid for poor and vulnerable people, as well as elimination of community development grants, first responder funding, and entrepreneurship grants.
Who is Subject to the Estate Tax?
- Fewer than 3 in every 1,000 estates are expected to be subject to the estate tax this year
- Extending the estate tax at 2009 levels would shield virtually all farm and small businesses from tax liability.
- A Congressional Budget Office study found that of the few farms and small businesses that would owe an estate tax liability in 2009, an overwhelming majority would have significant liquid assets to pay the tax without touching the farm or business.
* Congressional Budget Office, The Estate Tax and Charitable Giving, July 2004.
Last updated: December 4, 2009
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