Corporate philanthropy plays a vital role in supporting social, educational, and cultural initiatives, with U.S. corporations donating nearly $37 billion in 2023, marking a 3 percent increase from 2022.
Beyond corporate giving, the dynamic effects of a thriving business environment mean charitable donors of all types have greater means to donate to charitable causes that support communities in need. Prior research finds for every 10 percent increase/decrease in income, a donor increases/decreases charitable giving by 7 percent.
Despite the valuable contributions of corporate philanthropy and the interplay between economic dynamism and charitable giving, some policymakers and advocates have called for raising the statutory corporate tax rate.
Research consistently shows corporate income taxes are the most harmful form of taxation for economic growth, directly chilling corporate giving by reducing the resources available for charitable contributions.
Higher corporate taxes create a domino effect that harms the nonprofit sector by reducing direct financial contributions, weakening overall economic growth, and diminishing the ability of businesses and individuals to support charitable causes.
Corporate donations support a wide range of social programs, educational initiatives, cultural institutions, and community development projects. A decline in corporate giving could lead to reduced funding for these critical areas, negatively impacting the beneficiaries of corporate philanthropy.
Given the themes explored in this paper, policymakers should consider the potential harm to economic activity and corporate philanthropy, which supports critical social, educational, and community initiatives, before implementing changes to the statutory corporate tax rate.
Corporate Taxes and Charitable Giving: Why Raising Corporate Taxes Would Harm Philanthropy
