Repealing the federal estate tax could end up choking off billions of dollars in contributions to charities whose resources have been stretched thin by the Hurricane Katrina relief effort, a top tax policy researcher warned Congress.Testifying on behalf of the Brookings Institution's Tax Policy Center, economist William Gale cited a variety of studies suggesting that "estate tax repeal would reduce charitable bequests by between 22 and 37 percent" - a drop that would drain between $3.6 billion and $6 billion each year from the nation's charities.
If anything, the full impact on the budgets of nonprofits could be even greater, because estate tax repeal would also discourage the wealthy from making charitable donations during life, he said during hearings before the Senate Finance Subcommittee on Social Security and Family Policy.
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