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Estate Taxes and Charitable Bequests by the Wealthy

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  • David Joulfaian

Abstract

Charitable bequests are an important source of philanthropic support. Unlike bequests to children which can be taxed at a maximum statutory rate of 0.55, such transfers are exempt from estate taxation. Thus, by lowering the price of charitable giving, the estate tax may influence the disposition of terminal wealth. In this paper, I examine the effects of estate taxation on charitable bequests using data from estate tax returns of decedents in 1992. The results suggest that the estate tax deduction is budget' efficient. The overall effects of the estate tax, however, are likely to be modest as charitable bequests are wealth elastic.

Suggested Citation

  • David Joulfaian, 2000. "Estate Taxes and Charitable Bequests by the Wealthy," NBER Working Papers 7663, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7663
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    References listed on IDEAS

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    1. Auten, Gerald & Joulfaian, David, 1996. "Charitable contributions and intergenerational transfers," Journal of Public Economics, Elsevier, vol. 59(1), pages 55-68, January.
    2. Joulfaian, David, 1991. "Charitable Bequests and Estate Taxes," National Tax Journal, National Tax Association, vol. 44(2), pages 169-80, June.
    3. Wilhelm, Mark O, 1996. "Bequest Behavior and the Effect of Heirs' Earnings: Testing the Altruistic Model of Bequests," American Economic Review, American Economic Association, vol. 86(4), pages 874-892, September.
    4. Boskin, Michael J., 1976. "Estate taxation and charitable bequests," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 27-56.
    5. Joulfaian, David, 1991. "Charitable Bequests and Estate Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(2), pages 169-180, June.
    6. Clotfelter, Charles T., 1985. "Federal Tax Policy and Charitable Giving," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226110486.
    7. Charles T. Clotfelter, 1985. "Federal Tax Policy and Charitable Giving," NBER Books, National Bureau of Economic Research, Inc, number clot85-1, January.
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    Citations

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    Cited by:

    1. Gale, William & Slemrod, Joel, 2001. "Death Watch for the Estate Tax?," MPRA Paper 56440, University Library of Munich, Germany.
    2. Jon M. Bakija & William G. Gale & Joel B. Slemrod, 2003. "Charitable Bequests and Taxes on Inheritances and Estates: Aggregate Evidence from across States and Time," American Economic Review, American Economic Association, vol. 93(2), pages 366-370, May.
    3. Joulfaian, David, 2005. "Choosing between gifts and bequests: How taxes affect the timing of wealth transfers," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2069-2091, December.
    4. Michael Rushton, 2008. "Who pays? Who benefits? Who decides?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 32(4), pages 293-300, December.
    5. David Joulfaian, 2005. "Estate Taxes and Charitable Bequests: Evidence from Two Tax Regimes," Public Economics 0505004, EconWPA.
    6. repec:bri:cmpowp:13/326 is not listed on IDEAS
    7. Poterba, James, 2001. "Estate and gift taxes and incentives for inter vivos giving in the US," Journal of Public Economics, Elsevier, vol. 79(1), pages 237-264, January.
    8. John A. List, 2011. "The Market for Charitable Giving," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 157-180, Spring.
    9. Sanders, Michael & Smith, Sarah, 2016. "Can simple prompts increase bequest giving? Field evidence from a legal call centre," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 179-191.
    10. Atkinson, Tony & Backus, Peter G. & Micklewright, John, 2012. "Charitable Bequests and Wealth at Death," IZA Discussion Papers 7014, Institute for the Study of Labor (IZA).
    11. James R. Hines Jr., 2013. "The Redistributive Potential of Transfer Taxation," Public Finance Review, , vol. 41(6), pages 885-903, November.
    12. Doerrenberg, Philipp & Peichl, Andreas & Siegloch, Sebastian, 2014. "Sufficient Statistic or Not? The Elasticity of Taxable Income in the Presence of Deduction Possibilities," IZA Discussion Papers 8554, Institute for the Study of Labor (IZA).
    13. Joulfaian, David, 2004. "Gift taxes and lifetime transfers: time series evidence," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1917-1929, August.
    14. Joulfaian, David, 2001. "Choosing Between an Income Tax and a Wealth Transfer Tax," National Tax Journal, National Tax Association, vol. 54(n. 3), pages 629-43, September.
    15. repec:eee:pubeco:v:151:y:2017:i:c:p:41-55 is not listed on IDEAS
    16. Michael Sanders & Sarah Smith, 2014. "A warm glow in the after life? The determinants of charitable bequests," The Centre for Market and Public Organisation 14/326, Department of Economics, University of Bristol, UK.
    17. Doerrenberg, Philipp & Peichl, Andreas & Siegloch, Sebastian, 2017. "The elasticity of taxable income in the presence of deduction possibilities," Journal of Public Economics, Elsevier, vol. 151(C), pages 41-55.

    More about this item

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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