Losses to charities and the people they serve would likely exceed the estimated $10 billion a year if the estate tax is repealed, because of the impacts on charitable giving behavior from total elimination of the tax.

Losses to charities and the people they serve would likely exceed the estimated $10 billion a year if the estate tax is repealed, because of the impacts on charitable giving behavior from total elimination of the tax.

Recent economic research demonstrates that the estate tax plays an important role in giving people an incentive to donate money to charity. Recent estimates have put the loss to charities from an estate tax repeal at around $10 billion per year; however, even this large estimate is likely to be too small.

Studies that estimate the effect of a repeal must infer their results from limited data, and most studies examining the effects of the estate tax are based on small-scale differences or changes in tax rates. When considering a larger change, such as the elimination of the tax altogether, there are other factors that can also significantly impact behavior that are not captured. For example, repealing the estate tax may cause many people to forgo estate planning, which is a time when many wealthy individuals are introduced to various options, including charitable giving.

Estate tax planners and fundraising professionals point out that the existence of the estate tax brings both the opportunity to discuss the value of charitable giving with potential donors and acts as a "selling point" to increase charitable bequests.

A recent survey by Charles Schwab and Harris Interactive illustrates this point. The survey found that among wealthy Americans over 45 years of age only 10 percent say they are very likely to leave money to charity. According to the IRS, twice that many, or 20 percent of estates worth over $1 million, include a deduction for charity. This suggests that part of the estate planning process involves examining charities as one part of a bequest strategy, and that without an estate tax, many people would never even consider charitable giving as an option.

In fact, the Charles Schwab website includes extensive information on charitable giving, including information describing the tax advantage of charitable giving and even a charity search tool.

Charities are already struggling with reduced support because of the decline in the stock market and added burdens from federal government cutbacks. A repeal of the estate tax would only make this situation worse.

Statements by Charles Schwab executives:

• "People with more than a million dollars in net worth have a lot to gain -- or a lot less to lose -- by giving to charity." - President of the Charles Schwab Corporation Foundation
• "There are any number of tax-smart strategies available for charitable giving. . . " - VP of the Schwab Center for Investment Research