Do Charities Need the Death Tax?

If the federal estate tax were repealed, would charitable donations dip by 6% to 12% per year? Would charitable bequests decline by 16% to 28%?

Those estimates by the Congressional Budget Office are cited in this Dow Jones column.

Are charitable donors really so estate-tax sensitive? Aren't they more likely to be influenced by income tax deductions (likely to become more valuable for those with incomes over $500,000) and the ability to take capital gains tax free (via charitable remainder trusts)?

Charitable bequests no doubt would drop off without the estate tax, but probably not by much. Significant bequests usually spring from other motivations. Case in point, the (reportedly) $7.5 million bequest to The Metropolitan Opera left by Mona Webster, the lighthouse keeper's daughter who became in later life the wealthy widow of an investment manager.

Mrs. Webster, who died at age 96, didn't even earn her estate a tax deduction, according to the NYT account.