No Estate Tax Decreases Charitable Bequests

Although wealthy people are potentially able to pass more money to their family members in 2010 due to the lack of an estate tax, economists estimate that charitable bequests will actually decrease this year. Roberton Williams, a senior fellow at the Tax Policy Center in Washington, explains why this is:

With no estate tax in 2010, people have less incentive to leave charitable bequests. In 2009, when estates worth more than $3.5 million faced a 45 percent tax rate, giving away a dollar cost only 55 cents after taxes because such bequests are deductible and thus reduce the taxable estate. This year, with no estate tax and thus no tax savings, that cost nearly doubled to a full dollar.

Catherine Rampell, Estate Tax Hiatus Could Reduce Charitable Bequests, N.Y.Times, July 21, 2010.