Help stop a devastating reduction in charitable giving
The Case for Reforming the Estate Tax

What is the estate tax?
The federal estate tax is a tax on the transfer of large amounts of money. When someone dies, his or her assets (the person's estate) are distributed to heirs. If the total value of the estate is large enough, an estate tax is imposed before the assets are distributed. In 2003, the net value of an individual's estate must exceed the basic exemption of $1 million, with a $2 million exemption for couples. As part of President Bush's 2001 tax cut, this exemption will gradually rise to $3.5 million for an individual ($7 million for couples) by 2009. Currently, with planning, small business owners can pass on $5 million tax-free. For farms, that figure is $8 million.

The estate tax and charitable giving
By excluding an unlimited amount for charitable giving, the estate tax offers a valuable incentive to donate to charity. One-third of private foundation revenues come from estate tax giving. Minnesota benefits greatly from private foundation grants made possible by the incentive of the estate tax. $200 million in grants are made each year by Minnesota foundations that would not exist but for the estate tax - endowed by donors that made lasting contributions for years to come.

In 1999, estate tax filers in the U.S. paid $28 billion in gift and estate taxes, and made charitable bequests of nearly $15 billion. Higher education institutions, museums, religious groups, and many human service organizations will be directly affected if the estate tax is repealed. It is estimated that their revenues through bequests and donations could decline as much as 23 - 40% under repeal, which will mean a loss of $10 billion annually.

Estate tax repeal: devastating impacts to Minnesota charities
In Minnesota, repeal of the estate tax would translate to a loss of $197 million per year in charitable giving (based on 2001 charitable bequest data), or an average of $33,708 per charity. Repeal of the estate tax would have a devastating effect on charitable contributions and greatly reduce the number of new foundations being created. The nonprofit sector is important to Minnesota for the services, culture, and education it provides, and the economic development it creates.

Complete repeal of the estate tax would be bad for our democracy, our economy, and our society. Elimination of the estate tax would reduce federal revenue by nearly $1 trillion over the next two decades, lower Minnesota tax revenues, and have a devastating impact on charitable giving. As a constructive part of the U.S. tax structure for 85 years, the estate tax does not prevent families from passing on wealth to their heirs, and encourages charitable giving. With federal deficits exceeding $400 billion per year, complete repeal of the estate tax would irresponsibly expand the enormous national debt for future generations of Americans and reduce resources available for local communities.

Two recent reports site reform as better option
Two recent reports have further documented how the estate tax has the effect of encouraging charitable giving, and the amount of contributions that would be lost if the estate tax is repealed. This summary provides excerpts from the two reports and specific data for the impacts of repeal on Minnesota: Two-Report Summary

The full reports are also available:

Effects of Estate Tax Reform on Charitable Giving, Jon M. Bakija and William G. Gale, Urban-Brookings Tax Policy Center.

The Estate Tax and Charitable Giving: State-by-State Analysis,
John S. Irons, OMB Watch.

The Minnesota Estate Tax Reform Campaign
MCN has teamed up with Americans for a Fair Estate Tax and United for a Fair Economy as part of a national collaborative to educate and mobilize MCN members, the public, and decision-makers on the impact that permanent repeal of the estate tax would have on Minnesota's nonprofits and the state and country as a whole. MCN is working with these partners, the media, and other important constituencies, including labor, farm, business, and religious organizations, on a campaign to focus attention on the effects that permanent repeal of the estate tax would have on Minnesota.

View MCN's Estate Tax brochure

Take Action to preserve the estate tax!
The Minnesota Council of Nonprofits supports reform of the estate tax, and opposes complete repeal. We need you to help spread the word about the positive impacts of the estate tax and the devastating effects repeal would have on charitable giving.

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Estate Tax Resources and Links
United for a Fair Economy coordinates national grassroots action to preserve estate tax. UFE is a national, independent, nonpartisan organization that puts a spotlight on the damaging consequences of growing economic inequality. UFE's core message is that concentrated corporate and financial power is bad for the economy, undermines democracy and can tear communities apart.

Responsible Wealth members first spoke out in favor of retaining the estate tax in 2000. In 2001, Responsible Wealth issued the Call to Preserve the Estate Tax, a public statement signed by over 1,000 wealthy Americans. Responsible Wealth is a national network of businesspeople, investors and affluent Americans who are concerned about deepening economic inequality and are working for widespread prosperity. Primary areas of work for Responsible Wealth are tax fairness, corporate responsibility and living wages.

Americans for a Fair Estate Tax is a broad based nonpartisan coalition of nonprofit groups, including civic, labor, social justice, faith-based, and environmental organizations, as well as organizations providing human services. AFET advocates that Congress should reform the estate tax to safeguard Medicare, Social Security, education, charities and other key national priorities that would be greatly threatened by a complete repeal.

Wealth and Our Commonwealth: Why America Should
Tax Accumulated Fortunes, William H. Gates, Sr. and Chuck Collins
The story of over 1,000 high-net-worth individuals who, in 2001 protested the repeal of the estate tax, and in the process, made headlines everywhere. Central to this "billionaire backlash" were two visionaries: Bill Gates, Sr., co-chair of the Bill and Melinda Gates Foundation, the largest foundation in the world, and Chuck Collins, co-founder of United for a Fair Economy and Responsible Wealth, and a national expert on economic inequality. Gates and Collins argue that individual wealth is a product not only of hard work and smart choices but also of the society that provides fertile soil for success.

Questions? Comments? Contact Joshua Schenck Winters at josh@mncn.org