Estate-Tax Repeal: What Would It Mean for Philanthropy?

LETTERS TO THE EDITOR

To the Editor:

In Thomas J. Billitteri’s otherwise balanced and informative article (“A Taxing Dilemma,” July 27) on the pros and cons of the estate-tax repeal, there is one important omission.

Throughout the article those who favor the estate tax, or cite its value in advancing charitable giving, do so largely with reference to how it motivates donors at the very upper end of the financial spectrum.

But the chart accompanying the article does not contain the appropriate data to inform the arguments being made in the current debate. Showing no growth over the past decade in the percentage going to charity from taxable estates, the chart provides data for the entire spectrum of returns, including increasing numbers of smaller estates that give little or nothing in the form of charitable bequests.

The important question, however, as recognized by all those cited in the article, is what is happening among the estates of highest value for which the estate tax is deemed to be so crucial in encouraging philanthropy.

Using the same data source on which the chart is based, John Havens and I have reported that in the case of estates valued at $20-million or more and for which there is no surviving spouse, 34 percent of their value was given to charity in 1992, 41 percent in 1995, and 49 percent in 1997.

Thus, there appears to be a growing preference among the very wealthiest estates for charitable bequests, in contrast to the impression given in the chart, which simply presents the trends for all taxable estates.

Given that the estate tax has remained constant over this period, there must be some additional positive disposition coming into play that accounts for the upswing in the proportions of large estates going to charity. If we simply found that the amount going to charitable bequests was increasing, then the estate tax might be the reason — that is, because more dollars go to charity as the number of estates affected by the highest estate-tax rates increase. But a constant estate tax cannot explain why there is growth in the percentage of the largest estates going to charity — that is, why the largest estates display a growing charitable inclination.

Growth in wealth does not make people better or wiser, but it does lead to greater charitable giving. If the repeal of the estate tax leads to greater national and personal economic growth and unleashes the compelling motivations of voluntary choice and care for others, then there is reason to believe that the trends I cite will continue, perhaps even flourish, as tax considerations fade.

Paul G. Schervish
Director
Social Welfare Research Institute
Boston College
Chestnut Hill, Mass.