The estate tax applies to the inheritance package that parents bequeath to their children upon death.
The first $675,000 of an estate is exempt from taxation. The rest is taxed on a sliding scale, beginning at 37 percent and rising to as much as 55 percent for estates worth more than $3 million.
As for higher education, economic experts are divided on the significance the act would have on the amount of money donated to universities.
Speed Hallman, UNC's director of development communications, said no one knows for sure what the outcome of the repeal would be. "Some say it's good for higher education. Some say it's bad," Hallman said. "It's a very complex issue."
Many wealthy households bequeath large chunks of their estates to charitable organizations for tax deductions so that inheritors are left with less of a tax burden.
Mike Sholtz, director of the Development Office at Duke University, said nobody knows how the possible repeal of the estate tax is going to affect gifts from large estates. "My feeling is that more money in the family results in the long term as more donations."
Sholtz said private schools such as Duke would run more of a risk of losing money than public universities like UNC. But Sholtz said the impact likely would not be significant to either type of institution.
"At best, if the money doesn't come to us, the children would have more money to donate," he said.
Hallman stressed the importance of donations to public universities, such as UNC. "The state gives a foundation but the donations provide the excellence."
Boone Turchi, an economics professor at UNC, said repealing the estate tax would likely worsen the distribution of wealth and would do nothing to help the economy in a recession.
"There would be a sizable impact (on the amount of donations)," Turchi said.
He cited that people give to charities and universities because "it would do good" and "otherwise (the money) would go to taxes."
David Joulfaian, an analyst for the U.S. Treasury Department's Office of Tax Analysis, stated in a recent paper that as a group, the wealthy give more than one-third of their estates to charities upon death.
"The estate tax deduction is an important consideration in determining charitable bequests," Joulfaian concluded in his study. "Overall, however, the estate tax has a modest effect on giving."
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