Subscribe to Christianity Today
Subscribe to Christianity Today
Donate to Christianity Today
login | my account
February 12, 2012

Home > 2009 > AprilChristianity Today, April, 2009
Death Tax Resurrected
Churches and nonprofits poised to benefit from estate gifts.




Fiscal conservatives working at churches face a dilemma: the estate tax violates their free-market principles, but its reinstatement may be a boon to their employers.

The law, as it stands, is creating confusion. Congress is encouraging people to die in 2010, when there will be no estate tax, said Kent Kramer, a financial planner for wealthy Christian clients.

"Consider the family with a wealthy parent who has a terminal illness," he said. Under current law, "If he dies in 2010, all the wealth passes to heirs. If he dies on January 1, 2011 … [his] estate above $1 million would be taxed heavily."

As the increasingly indebted federal government looks for new ways to bring in revenue, the so-called death tax will be one of the first considered. This may be good news for churches and nonprofits that receive estate gifts.

"The estate tax encourages wise financial planning," said David Wills, president of the National Christian Foundation. "[It] forces people to think how their assets will be transferred."

The estate tax began a phaseout in 2001, when President George W. Bush and the Republican Congress passed the first of two large tax cuts. Under current law, estates are exempt from taxation for the first $3.5 million with the balance taxed at 45 percent. President Obama proposed maintaining these rates in his budget. The tax will disappear in 2010 but is scheduled to return in 2011 to its previous level, exempting the first $1 million of an estate and taxing the balance at 55 percent.

Kramer said wealthy individuals will have an incentive to give to charitable causes beyond the level of the exemption. "Many people would rather direct who will benefit from their estate as opposed to giving so much to the government," he said.

Christian economists and financial planners debate whether the estate tax is good public policy. "Over the long haul," said Wills, "charitable giving does not benefit from the estate tax because it takes so much wealth." Wills said people who create wealth are better at investing it than the government, which would lead to greater overall economic growth.

But Calvin College economist John Tiemstra says the estate tax is advantageous because it does little to change the economic behavior of those affected. He also believes progressive taxes like the estate tax are more consistent with Scripture because they levy higher rates for those who are wealthier. Once people have met their basic needs, said Tiemstra, "equality is at least as important as prosperity."

Whatever the merits for individual incentive or equality, churches and nonprofits are paying attention as Congress considers the matter. Almost any new law would be helpful, said Wills, because "you can't plan for the tax when it's changing."



Related Elsewhere:

Christianity Today has more stories about money & business and death & dying. See CT's news section and liveblog for more news updates.





Christianity Today


  


Subscribe to Christianity Today and get 3 free trial issues. No credit card required.

Please allow 4-6 weeks for delivery. Offer valid in U.S. only.

If you decide you want to keep Christianity Today coming, honor your invoice for just $19.95 and receive nine more issues, a full year in all. If not, simply write "cancel" across the invoice and return it. The three trial issues are yours to keep, regardless.


Click here for international orders2-for-1 Gifts!

Displaying 1–5 of 37 comments

Matt R.

April 07, 2009  2:35pm

...or just hand your heirs shoeboxes full of cash. No taxes on what the IRS doesn't know about....

Pilgrim

April 07, 2009  2:25pm

"The person who spent his life pursuing financial success--at times at the expense of his family" should be aware of the great potential for anxiety and regret, along with his or her great sacrifices. As for me, I'd rather not deal with the burdens of wealth and fame. Data shows that the poorer households are among the more generous. It is harder to be generous when you are obsessed with holding onto what you've amassed. Still there are some remarkably generous people with wealth. I'd rather not have the government dictating how enormous sums of peoples' money are spent, however. But thanks to big government spending, we're all going to be paying a very heavy price, whatever our income.

Andy C

April 06, 2009  8:42pm

This quote, "Once people have met their basic needs, said Tiemstra, "equality is at least as important as prosperity." just shows how this person thinks. Why should you work hard just so someone else doesn't have to? Your assets are yours and you should be able to do what you want with them. Now, if you donated 55% of your assets to a church or charity, and the other 45% was not taxed (regardless of the size of the portfolio; ie above 3.5 mil) then i would support it. I just think that charities and private citizens can put assets to work much better and more efficiently than the government.

Duane W. - Greenville, SC

April 04, 2009  10:21am

Our family has experienced one setback after another. We are always broke and in debt, not because of overspending or charging things on credit cards. We don't. Our problems are based on misfortunes, medical and others. Yet, the Lord is our Helper and He knows exactly what we need and will supply in His perfect time. God is always sufficient. I said all that to say this - regardless of how broke or in debt we are, it is still categorically wrong to take from the rich or well off to pay or bail out anyone else. Leave them alone. If God is ready to supply our need, He, and He alone will lay it upon the heart of those more fortunate them ourselves to help us. If our needs are not being met, we need to turn to God and His word and see where we are wrong. It most likely is personal sin, especially the kind that no one else knows about. Let's get back to our Bible first and our Constitution second, and let it stop right there. Anything above that is out and out theft by the government.

Dave Jones

April 03, 2009  11:05am

Years ago a million dollars was a lot of money, but now it is almost as much as a house and a small business. So if a parent wants his sole child to get the Family house and business, too bad. And even dividing up an estate between several children doesn’t help since the tax is on the whole estate, not what each child gets. Yet the super rich, can escape these taxes. They setup trusts that put their wealth into funds that while the child can’t touch, he children get money every year, just for breathing. Just look at the Kennedy’s. Houses are in a trust, that the family can use, but not houses that they can sell.

You must be a Christianity Today subscriber or have created a FREE registration to post comments
[Browse More Christianity Today]



Search
Search
Search
Scripture Search
Go Deeper

Books & Culture
Christianity Today
Church Law & Tax Report
Church Finance Today
Leadership Journal
Men of Integrity
Kyria.com
ChristianityTodayLibrary.com
PreachingToday.com