Corporate philanthropy is a powerful force in American communities, with U.S. corporations contributing nearly $37 billion to charitable causes in 2023.
The generosity of corporate philanthropy plays a crucial role in funding programs across the country, including educational initiatives, community development projects and cultural institutions that are either underfunded by the government or ineligible for support. Research by the Roundtable’s Jack Salmon makes a powerful case that increasing the corporate tax rate would harm philanthropy and societal flourishing.
In his paper “Corporate Taxes and Charitable Giving: Why Raising Corporate Taxes Would Harm Philanthropy,” Salmon highlights a close link between income fluctuations and charitable donations. For every 10% increase or decrease in income, donors adjust their giving by approximately 7%. This relationship underscores the importance of sound tax policy and a healthy economy for sustaining philanthropy at all levels.
Ultimately, the nonprofit organizations that depend on corporate and charitable giving could be hurt most by higher corporate taxes. When corporations send more money to government, it risks a decrease in donations to nonprofits that fund critical social services, educational programs and cultural projects that enhance community well-being.
A drop in donations would also limit the reach and effectiveness of programs designed to serve vulnerable populations. This decline in philanthropy would be felt most deeply by those Americans who rely on these services, exacerbating existing disparities that stifle opportunity in our country.
Studies consistently indicate corporate income taxes are particularly detrimental to economic growth, directly eroding businesses’ ability to make charitable contributions. When the economy thrives, corporations and individuals have more resources to support causes they care about, creating a virtuous cycle of giving that amplifies the impact of charitable efforts.
As policymakers debate tax reform in 2025, it is crucial to weigh the broader economic implications. Raising corporate tax rates might yield short-term revenue gains, but the long-term consequences on charitable giving and societal flourishing could be substantial. A careful, balanced approach to taxation that preserves the health of economic growth and corporate giving will best support the array of social, educational and community-focused initiatives that rely on philanthropic generosity.
