An Estate Tax Increase With Bipartisan Support

In President Obama’s State of the Union address, he proposed several tax increases aimed at affluent taxpayers.  While proposals were controversial among Republicans, one such increase Republicans might be persuaded to support is limiting the estate tax deduction for bequests to private foundations. 

Currently, the federal estate tax charitable deduction is unlimited.  Contrastingly, the federal income tax charitable deduction includes detailed limitations that restrict the proportion of an individual taxpayer’s income that may be deducted as a charitable contribution.  With these limits, the income tax charitable deduction implements the idea that everyone should pay some federal income tax. 

Similarly, the federal estate tax should be amended to restrict an estate’s charitable deduction to a percentage of the estate.  Consequently, every estate large enough to trigger federal estate liability would pay some estate tax, even if that estate transfers in its entirety upon charitable recipients. 

See Edward Zelinsky, An Estate Tax Increase Some Republicans Might Support, OUPblog, Feb. 2, 2015.

Special thanks to Edward A. Zelinsky (Professor of Law, Benjamin N. Cardozo School of Law) for bringing this article to my attention.