Public Policy
Estate Tax

Current Law

The first $5.45 million ($10.9 million for married couples) of an estate is exempt, while the remainder is taxed at a 40 percent rate. The exemption level is indexed to inflation.


CASE Position

CASE supports the preservation of the estate tax.


Impact on Educational Institutions

Studies by the Congressional Budget Office and the Brookings Institution suggest that full repeal of the estate tax would reduce charitable giving by 6 to 12 percent per year and reduce bequests by 16 to 28 percent. Research suggests that increasing the exemption to $2 or $3.5 million would reduce charitable giving by less than 3 percent but that lowering the estate tax rate would result in more significant decreases in charitable giving.

During the past two decades, bequests have represented between 18 and 25 percent of all personal giving received by educational institutions. Deferred gifts have represented between 5 and 19 percent of personal gifts to education during the same time. In 2008, educational institutions reported receiving $2.65 billion in bequests and $740 million in deferred gifts (at present value). These figures reflect only those institutions participating in the 2008 Voluntary Support of Education survey.


Status

As of November 10, the House tax reform bill and the Senate tax reform bill differ significantly on the Estate Tax. The House bill calls for the exemption level to double to $10 million, indexed for inflation and for the full repeal of the Estate Tax by 2025. The Senate bill calls for the exemption level to increase to $11 million, indexed for inflation and does not call for the repeal of the Estate Tax. 

Updated November 17, 2017


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