A two-state analysis of estate taxes and charitable bequests from the most generous decedents |
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Authors: | Steven A Hanke Ted D Englebrecht Hui Di Timothy Bisping |
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Institution: | 1. Department of Accounting and Finance, Richard T. Doermer School of Business, Indiana University–Purdue University Fort Wayne, 2101 E. Coliseum Blvd., Fort Wayne, IN 46805, United States;2. Smolinski Chair of Accounting, School of Accountancy, College of Business, Louisiana Tech University, P.O. Box 10318, Ruston, LA 71272, United States;3. Department of Economics & Finance, College of Business, Louisiana Tech University, P.O. Box 10318, Ruston, LA 71272, United States |
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Abstract: | This study uses Censored Quantile Regression (CQR) and probate records for the years 2000–2005 to analyze charitable bequests of the most generous decedents from two states, Virginia and Louisiana. We focus on the most generous decedents because they account for a large portion of total charitable bequests. The most generous decedents' charitable bequest tax price (i.e., one minus the marginal tax rate) elasticity is not significantly greater than one in both our full sample and the subsample of the decedents filing federal estate tax returns. Our finding suggests that allowing charitable bequests to be deductible is not a treasury efficient policy for the most generous decedents. We also find that the tax price and wealth effects for the most generous decedents are overestimated by the Tobit model that has been traditionally utilized by prior studies. Furthermore, filers' charitable bequests are predicted to decrease if the estate tax is repealed. |
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Keywords: | Charitable bequests Estate tax Censored quantile regression |
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