TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Thursday, December 20, 2012

Zelinsky: Congress Should Limit the Estate Tax Charitable Deduction

Estate Tax LogoEdward A. Zelinsky (Cardozo), Limit the Estate Tax Charitable Deduction:

One widely-discussed possibility for reforming the federal income tax is limiting the deduction for charitable contributions. Whether or not Congress amends the Code to restrict the income tax deduction for charitable contributions, Congress should limit the charitable contribution deduction under the federal estate and gift taxes. Such a limit would balance the need for federal revenues with the desirability of encouraging charitable giving. ...

There is ... considerable tension between the Buffett commitment to federal estate taxation and the Buffett commitment to philanthropy. By virtue of the estate tax charitable deduction, when a wealthy decedent leaves part or all of his estate to charity, no estate tax is paid on these contributed amounts. ...

A limit on the estate tax charitable deduction could be constructed to fall only on relatively larger estates. For example, the first $10 million of charitable bequests could be fully deductible for estate tax purposes and only the amount gifted over that threshold would be deductible in part. Alternatively, the limit could be phased in as charitable contributions increase. For example, the first $10 million of charitable bequests could be fully deductible for estate tax purposes. Then the next $50 million of philanthropic gifts could be 90% deductible and any further gifts would be 70% deductible for federal estate tax purposes.

The details are less important than the basic policy: By limiting the estate tax charitable deduction, all large estates donated to philanthropy would pay some federal estate tax revenues at a reduced rate. This would balance the need for federal revenues with the encouragement of the kind of charitable bequests quite commendably encouraged by Mr. Buffett and the Giving Pledge.

http://taxprof.typepad.com/taxprof_blog/2012/12/zelinsky-congress.html

Tax | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef017ee66d6275970d

Listed below are links to weblogs that reference Zelinsky: Congress Should Limit the Estate Tax Charitable Deduction:

Comments

Good grief! Who is Zelinsky and why is he giving Congress ideas like this? It is less important to get revenge on Buffett for his inconsistency than to stand up for the basic concept of protecting private property (upon which concept our nation was largely founded). One should stand for protecting private property from government confiscation at death - period. If unable to achieve success there, then one should absolutely stand at the gate to protect private property from government confiscation when one wants to give it away to charity at death. To do otherwise is to foolishly allow ourselves to get on the slippery slope of notions of "fairness" which lead ultimately to the very un-American idea that our property really belongs to the government, and we only get to keep, or to control, some portion of our property that government deigns to allow us to keep or control.

Posted by: Jack Gallagher | Dec 20, 2012 4:31:37 PM