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E-M:/ [nonprof] ALERT: Repeal of the Estate and Gift Tax: WhyShould Nonprofits Care?]

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>Michelle, Can you please put this out on enviro-mich? I hope Alex will
think this is relevant.

From: "Matt Carter" <carterm@ombwatch.org>
>To: "OMB Watch Nonprofit Issues" <nonprof@lyris.ombwatch.org>
>Date: Tue, 5 Sep 2000 14:25:35 -0400
>Subject: [nonprof] ALERT: Repeal of the Estate and Gift Tax:  Why Should
Nonprofits Care?
>Reply-to: "Matt Carter" <carterm@ombwatch.org>
>Priority: normal
>X-mailer: Pegasus Mail for Win32 (v3.12c)
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>It is likely that nothing Congress will do this year could have 
>greater impact on the nonprofit sector than the elimination of the 
>estate tax, a bill vetoed by the President on August 31.  
>Republicans intend to try a veto override, possibly as soon as 
>Thursday, September 7.  Yet many nonprofits are not aware of the 
>importance of this issue and the potential ramifications of a repeal 
>of estate tax obligations. 
>The estate tax is primarily a tax on the wealthiest Americans.  Its 
>goal is consistent with our progressive tax system that was 
>designed so that wealthier citizens pay higher taxes than those 
>who are less well off.  Given recent statistics that reveal a still-
>growing gap between the very rich and the very poor--even in these 
>times of overall economic prosperity--repealing the estate tax is a 
>step in the wrong direction.  We should be looking at ways to 
>bridge that gap rather than contributing to it by giving additional tax 
>breaks to those citizens with the highest incomes and greatest 
>While the elimination of the estate tax has been billed as “saving” 
>small family farms and businesses, in fact, very few small farms 
>and businesses pay any estate tax (less than 4% of all estate tax 
>revenue), and they are already well-protected with substantial 
>exemptions from tax liability.  Make no mistake, the estate tax is a 
>tax on “mega” estates, the wealthiest 2% of all taxpayers.
>For nonprofits, repeal of the estate tax is not only a social justice 
>issue; it is also a pocketbook issue.  First, the repeal of the estate 
>and gift tax will likely have a significant impact on charitable 
>donations.  A U.S. Department of Treasury report finds that without 
>the estate tax, charitable contributions could drop as much as 12 
>percent—or roughly $5 to $6 billion a year. 
>Second, repeal of the tax also means a huge loss of revenue to the 
>country and reduced resources for federal support of programs 
>implemented and supported by nonprofits.  Over the first ten years, 
>the loss of revenue will be approximately $105 billion, but once the 
>tax is fully phased out, the estimated costs will be approximately 
>$50 to $70 billion per year.  That amounts to more than a half a 
>trillion dollars over ten years.   This is revenue that could be used 
>to invest in education, health care, the environment—all the 
>pressing needs that exist in the country.  Further, since many 
>state taxes are piggybacked on the federal estate tax, states 
>would also lose revenue.
>You can be certain that if Congress is successful in overriding the 
>Clinton veto, we will have to live with the effects for a long time.  
>Congress is not prone to reversing tax breaks, especially since it 
>will then be perceived as a tax hike.  At a time when the rate of 
>poverty among children under 18 in the U.S. remains one-third 
>higher than it was thirty years ago and when 44 million people have 
>no health insurance, significantly higher than in 1992, there are 
>other, more pressing needs in the country than repealing the estate 
>tax—and giving a bonanza to a few of the wealthiest. 
>The estate tax is a tax on transfers of assets from an estate upon 
>death.  It is not a tax on “death,” but a tax on the assets 
>transferred to heirs of an estate.  The gift tax is a tax on lifetime 
>transfers of assets to beneficiaries.  A single tax rate applies to the 
>value of all transfers made by a taxpayer during his/her lifetime (gift 
>taxes) and the value of the estate at his/her death (estate taxes).
>Under current law, an estate that is worth less than $675,000 (or 
>$1.35 million for a couple) is exempt from any estate taxes.  
>Transfers to a spouse are entirely exempt.  A small business or 
>farm worth less than $1.3 million (or $2.6 million for a couple) is 
>exempt from any estate tax.  Unlimited annual gifts of up to 
>$10,000 per recipient (usually made to relatives) are not taxed. 
>Charitable contributions are another way to reduce estate tax 
>liability.  In addition there are other deductions, credits, and estate 
>planning strategies that can further reduce the tax rate on estates.  
>It is estimated that 98 percent of all estates are not subject to 
>taxation under these exclusions.  Only 1.9 percent of people who 
>died in 1997 had estates on which any estate taxes were paid.
>H.R. 8, passed by Congress, would begin phasing out the tax on 
>estates and gifts for any death occurring after December 31, 2000.  
>By January 2011, the estate tax would be completely eliminated.
>Spread the word.  Many nonprofits are not aware of the importance 
>of this issue. Attached as an RTF file is a more in-depth OMB 
>Watch analysis of the proposed repeal of the estate tax.  That 
>analysis, along with letters opposing the estate tax by the National 
>Council of Nonprofit Associations, Friends of the Earth, the United 
>Church of Christ, and the Coalition on Human Needs, and other 
>materials, can also be found at the OMB Watch Estate Tax 
>Resource Page <http://www.ombwatch.org/npadv/estatetax>.  
>Please feel free to forward this email or distribute printed copies of 
>any of these materials to other nonprofits that might not know 
>about this very crucial issue.    
>For more information, please contact Kay Guinane 
>(guinanek@ombwatch.org) or Ellen Taylor (taylore@ombwatch.org) 
>at OMB Watch (202 234-8494)
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>     Date:  5 Sep 2000, 13:24
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