Quote:
Originally posted by baltassoc
And Burger: philanthropically, do you think that the repeal of the estate tax entirely will help or hurt the philathropy rate among the upper class, given that charitable donations will no longer be given favorable (estate) tax treatment? I'm thinking hurt, on average.
|
I suspect it will change the pattern, but I'm not sure it will necessarily hurt in the long run.
first off, people give to charity first and foremost because they believe in the cause. No tax break is going to let you give to charity without giving up some of your own (or heirs) money.
Second, if the stepped-up basis disappears, that will create an incentive for charitable giving. If you give an appreciated asset, you get to deduct the full value, but the charity doesn't have to pay the k-gains tax. So while you would (under current law) avoid 15% tax instead of 50%, you still avoid some. What's more, you'll have that incentive througout your life, rather than only upon death.
So, at bottom, I suspect the change will affect more the timing of gifts than the amount (i.e., on a stream, rather than only at death).
Finally, I'm not sure tax policy should be justified by the effect on charity. Any charitable deduction is inherently a subsidy from the government. So, even if a change to the estate tax causes charitable giving to decline, it could still fairly be argued that the decline is from a too-high level.
