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Charitable Bequests and the Federal Estate Tax: Proposed Restrictions on Deductibility
Bittker, Boris
Bittker, Boris
Abstract
I want this evening to discuss with you an important proposed amendment to the federal estate tax law, under which the deduction allowed for charitable bequests-now unlimited in amount -would be limited to a specified percentage of the testator's estate. The most frequently mentioned figure is 50 per cent. Similar proposals to emulate the income tax by imposing a percentage limit on the deduction of charitable contributions have been floated from time to time for at least 35 years, but recently these trial balloons have attracted more attention on Capitol Hill than ever before. By itself, the issue is a narrow one, affecting only a small fraction of estates; but I propose to show that it raises fundamental issues about the nature and objectives of death taxation and that, on analysis, the proposal for a percentage limitation turns out to rest on a faulty foundation. This analysis also exposes parallel shortcomings in the rationale underlying several other proposed changes, such as converting the deduction into a tax credit or substituting a system of matching federal grants to charitable institutions.