It is not possible to endorse the work of charitable agencies — including "faith-based" agencies — while simultaneously working to eliminate the estate tax.
President Bush claims he wants to expand the capacity and effectiveness of "faith-based" nonprofits. If he succeeds in eliminating the estate tax, however, his legacy will be that of the president who crippled the nonprofit sector and drove many of those faith-based charities out of business.
The Congressional Budget Office has completed a new study on the impact of the estate tax on charitable giving. It confirms what every previous study on the subject had found: Elimination of the estate tax would result in a decrease in charitable giving of up to 12 percent.
Consider the impact of that decrease.
This is essentially a 12-percent, across-the-board budget cut for every nonprofit and philanthropic agency in the country: Art museums, hospitals, soup kitchens, theaters, health clinics, universities, housing agencies, operas, domestic violence shelters, mentoring programs, dance companies, after-school programs, conservation and preservation groups, homeless shelters, orphanages, adoption agencies, local churches, food pantries, parochial schools, libraries, animal welfare agencies, historical societies, mission agencies, job training programs, group homes, disaster relief agencies, international aid groups. The scope of their work is vast. Their impact is immeasurable.
All of these will have to learn to make do with 12 percent less. They will have to do 12 percent less. We're talking about a 12-percent decrease in the good, the beautiful and the true.
More than 12 percent, actually. Many nonprofit agencies operate with very tight margins. This is particularly true of those agencies that serve the neediest and poorest. When the art museum catches a cold, the soup kitchen gets pneumonia. For many vital nonprofit agencies on the front lines, a 12-percent drop in charitable giving will mean they have to close their doors.
On the other hand …
There is no other hand. There is no sound policy reason to abolish the estate tax. None. (Max vivisects the disingenuous arguments for repeal here.)
Eliminating the estate tax will increase the federal debt by hundreds of billions of dollars over the coming decades. That debt will eventually have to be repaid the same way the rest of the Bush deficits will — through massive tax increases on our children and grandchildren.
But even if future generations find a way to replace the lost revenue, they won't be able to replace the loss of one of the largest incentives for charitable giving. They won't be able to reach back in time to restore the nonprofit agencies whose work was hobbled or ended by Bush's foolish and unnecessary elimination of the estate tax.
It's hard to imagine a more perverse and indefensible piece of legislation than this evil and unnecessary bone to the ultra-rich. Its supporters ought to be forced to defend and explain their position.
Opponents of this measure need to get out of the Capitol building and start holding press conferences at those nonprofit agencies whose future is at stake. I'd like to see members of Congress standing alongside nurses, college presidents, librarians, tutors and ballet dancers at the doors of their local food pantries, explaining precisely what a 12-percent budget cut will mean for these essential institutions.
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