Estate Taxes and Charitable Bequests by the Wealthy

David Joulfaian ()

National Tax Journal, 2000, vol. 53, issue 3, 743-64

Abstract: Charitable bequests are an important source of philanthropic support. Unlike bequests to children, which can be taxed at a maximum statutory rate of 0.55, such transfers are exempt from estate taxation. Thus, by lowering the price of charitable giving, the estate tax may influence the disposition of terminal wealth. In this paper, I examine the effects of estate taxation on charitable bequests using data from estate tax returns of decedents in 1992. The results suggest that the estate tax deduction is "budget" efficient. The overall effects of the estate tax, however, are modest; while the tax stimulates giving by lowering the tax price, it also discourages giving as it reduces terminal wealth.

Date: 2000
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