Copyright 2000 Phoenix Newspapers, Inc.
THE ARIZONA
REPUBLIC
July 18, 2000 Tuesday, Final Chaser
SECTION: BUSINESS & MONEY; Pg. D1
LENGTH: 502 words
HEADLINE:
WITH ESTATE-TAX REPEAL A POSSIBILITY, CHARITIES WONDER IF
THEY'D BE HURT
BYLINE: RUSS WILES, The Arizona Republic
BODY:
Now that both the House and Senate have
passed a law that would repeal the estate tax, it raises an important question:
Would charities and other non-profit groups suffer as a result?
There's
little reason to worry about an immediate drop in giving since President Clinton
has promised to veto the measure. But estate taxes could linger as an election
issue and move back to the front burner, especially if the Republicans fare well
at the polls in November.
"We're not jumping out of any windows," said
Stephen Mittenthal, president and executive director of the Arizona Community
Foundation. "But I think it will test the belief that people give for
eleemosynary reasons."
It's hard to say for sure what motivates people
to donate money, but tax minimization certainly is a factor.
Estate
taxes kick in at 37 percent and go as high as 55 percent. This year, estates
above $675,000 are subject to tax, although a married couple can shelter $1.35
million with proper planning. Those figures will rise to $1 million and $2
million by 2006 in the absence of repeal.
(Incidentally,
income-tax-deductible donations to charity wouldn't be affected by the
estate-tax legislation.)
Currently, people can skirt estate taxes on
assets they donate to non-profit groups. But if the tax obstacle is removed,
giving could decline, some fear.
"Charities, which have been one of the
tremendous beneficiaries of the tax, will see a dramatic reduction in the
numbers of large donations that they will receive," said Mitchell Gaswirth, an
estate-planning attorney at the law firm Proskauer Rose in Los Angeles.
All sorts of non-profit groups could be hit, ranging from churches and
philanthropic groups to research institutions and universities.
But it's
hard to estimate how big the impact might be. Mark Feldman, a partner at Arthur
Andersen in Phoenix, thinks the consequences would be most noticeable among
people with small fortunes but less discernible among the superwealthy.
"I don't think Warren Buffett or Bill Gates would change their minds one
bit," said Feldman, citing the charitable plans announced by the two
billionaires.
Some wealthy people don't want to leave so much cash to
heirs that it would spoil them.
Besides, many benefactors believe in the
causes they aid and want to create legacies. "People still want to be
remembered," said Craig Wilson, a senior vice president at Northern Trust Bank
of Arizona in Phoenix.
Some philanthropic groups like the Carnegie Corp.
were established before estate taxes, or income taxes, debuted around World War
I.
Mittenthal thinks the health of the stock market is more critical for
giving, partly because a person can avoid capital-gains taxes by donating
appreciated shares.
He even sees a silver lining in that the political
maneuverings might spur more Americans to think hard about their own estate
plans, with donations an option.
"Who would have thought that the estate
tax would ever become a major issue for political debate?" he asked.
COLUMN: YOUR MONEY
LOAD-DATE: July 22, 2000