Background

Consideration in the 111th Congress
During debate on the FY 2009 budget resolution, the Senate narrowly approved an amendment to its original budget resolution that would have weakened the estate tax significantly. Offered by Senators Lincoln (D-AR) and Kyl (R-AZ), the amendment, which was supported by ten Democratic and all Republican senators, would raise the individual exemption to $5 million ($10 million/couple) and lower the tax rate to 35 percent.

In letters to senators and in a statement (PDF) issued March 31, 2009, Independent Sector expressed support for the budget resolution estate tax language and opposition to the Lincoln-Kyl amendment.

Senate Hearing in the 110th Congress
The Senate Finance Committee held a hearing April 3, 2008, entitled, "Outside the Box on Estate Tax Reforms: Reviewing Ideas to Simplify Planning." Diana Aviv, president and CEO of Independent Sector, testified at the hearing and addressed the estate tax both as an important incentive for giving to charity and as a critical source of revenue for the federal government. She also discussed areas of abuse and offered suggestions for improving compliance.

• See Diana Aviv’s Written Testimony (PDF)...4/3/08
• See Diana Aviv's Written Responses (PDF)...4/3/08

Resources
The Congressional Budget Office has found that the estate tax leads affluent individuals to donate far more than they otherwise would, because such donations sharply reduce estate tax liabilities. The CBO found that about one-sixth of the estates filing estate tax returns in 2000 left a charitable bequest which together totaled $16 billion. Charitable bequests were heavily concentrated in the largest estates with over 70 percent of the total bequests coming from estates valued at more than $3.5 million. (CBO, The Estate Tax and Charitable Giving, July 2004)

Permanent repeal of the estate tax would cost almost $1.3 trillion over the first ten years in which its cost would be fully felt, 2012-2021, according to the Center for Budget and Policy Priorities. This includes $1 trillion in lost revenue and $277 billion in increased interest payments on the national debt. According to the Urban Institute-Brookings Tax Policy Center, a proposal to raise the individual exemption to $5 million and lower the tax rate would reduce estate tax revenue by almost four-fifths as much as full repeal of the tax.

CBO Reports
Effects of the Federal Estate Tax on Farms and Small Businesses (PDF) July 2005
Charitable Bequests and the Repeal of the Estate Tax (PDF) July 2004
The Estate Tax and Charitable Giving (PDF) July 2004

Center on Budget and Policy Priorities reports on estate tax.

Brookings report, Effects of Estate Tax Reform on Charitable Giving June 2003