April 28, 2005 | Read Time: 1 minute
In a step opposed by many charities and private foundations, the House of Representatives has voted to permanently repeal the federal estate tax. The controversy over repeal of the tax will now be taken up by the Senate.
Under current law, the estate tax will be phased out gradually in coming years, then will be repealed entirely for one year in 2010. After 2010, without a new law, the tax will be restored. The bill that was passed by the House would make the repeal permanent beginning in 2010. Enactment of the proposal is a top priority of the Bush administration.
Many nonprofit organizations worry that repeal of the tax would eliminate a powerful incentive for wealthy donors to make charitable bequests. Last year, the Congressional Budget Office estimated that repealing the tax on estates would lead to a decline in overall giving to charity of between 6 and 12 percent.
Republican and Democratic members of the Senate are trying to negotiate a compromise bill that they say would change the way the estate tax is applied but not repeal it.
Independent Sector, a coalition of more than 500 charities and foundations, told House members that it understood the need “to reform the estate-tax laws and support efforts to give relief to family farmers and small businesses” adversely affected by the tax. “But the very wealthiest estates should contribute to meeting the needs of the nation,” the coalition said. “A reformed tax will not negatively impact their heirs, who will still be extremely rich.”
