Charities Would Lose Millions if Estate Tax Eliminated, Report Says
WASHINGTON (AFP eWire - Nov. 3, 2003) - If the U.S. Congress decides to fully repeal the estate tax, charities will lose approximately $10 billion in giving every year, according to a new study.
On average, states would lose $187 million every year in charitable giving, with larger states losing more, according to the study 'The Estate Tax and Charitable Giving: State-by-State Analysis.' At the top of the list, New York would lose almost $1.5 billion, while Wyoming would lose 'only' $5 million. On average, each charity that files with the IRS would lose $39,000.
The report was released in October by OMB Watch, a Washington, D.C.-based nonprofit that promotes government accountability, and Americans for a Fair Estate Tax, a coalition of nonprofits that oppose the repeal of the estate tax. Researchers used state-level data on charitable revenue to present the state-by-state analysis.
'At a time when charitable organizations are being asked to do so much for the country, the reduction in charitable giving that would be caused by an estate tax repeal would place a potentially devastating burden on the nonprofits that serve us so well,' said John Irons, Ph.D., a senior economic research and policy analyst and staff economist at OMB Watch.
Larger charities and those that rely heavily on bequest giving would lose more, the study said. The study estimated that charitable bequests would decline between 22 percent and 37 percent. In 2001, that would have meant a loss of $3.6 billion to $6 billion of the $16.2 billion in charitable bequests.
The estate tax encourages charitable giving because it provides tax incentives to give to charities. It is slowly being phased out through 2009 and will be repealed for one year in 2010. However, it will be reinstated in 2011 unless Congress votes to permanently repeal it.
The U.S. House of Representatives voted in June to permanently repeal the tax, but the Senate has yet to vote. OMB Watch expects the Senate to vote on the issue this winter or spring. Permanent repeal failed by six votes in the Senate last year. For more information on the study, visit the OMB Watch website.
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