March 22, 2001 | Read Time: 2 minutes
By ELIZABETH SCHWINN
As Congress considers measures to phase out the estate tax, opposition to the plan is mounting among nonprofit groups.
Independent Sector, a coalition of charities and grant makers, has spoken out for the first time against repeal of the tax, calling it “a proven incentive for the wealthiest Americans to give to charitable organizations.”
At the same time, OMB Watch, an organization that monitors federal spending policies, is organizing a coalition of nonprofit groups to oppose repeal of the estate tax, saying that nonprofit organizations need to be in the forefront of the anti-repeal effort. Repeal would generally benefit the wealthy while depriving federal and state government programs of a big source of revenue, the group said. It cited a Treasury Department estimate that abolition of the estate tax would reduce charitable bequests by between $5-billion and $6-billion a year.
Nonprofit officials have been divided over whether saving the estate tax should be a priority. Some argue that too little is known about the tax’s effect on giving to take a stand. Others say that donors will continue to make bequests, or some other form of charitable gift, even without the incentive of the estate-tax deduction. Many nonprofit advocacy groups have taken no official position on the estate tax.
Independent Sector says it decided to oppose repeal after listening to a group of 24 nonprofit officials it recently appointed to help develop policy positions.
The group said in a recent statement that if the tax is lowered or changed it should still be structured to fall most heavily on the largest estates, to serve “as a check on the accumulation of inherited wealth in the hands of a very few.”
In other policy positions, Independent Sector said it opposes the creation of charity tax credits. President Bush wants the House and Senate to approve legislation that would encourage states to offer charity tax credits to individuals and companies — up to 50 percent of the first $500 for individuals, and up to $1,000 for married couples and corporations — for gifts to antipoverty groups.
The charity tax credit plan has several pitfalls, Independent Sector says. First, it creates an incentive for people to donate to some charities rather than to others, thus pitting different types of groups against one another. Also, groups that help the poor might actually get less money under the plan, since states could use federal welfare money to offset the costs of the tax credits. If the credits were financed with money already designated for antipoverty organizations, and if they didn’t stimulate more new giving than the cost of the credit, they would decrease rather than increase funds available to such groups, the coalition says.
