Last week, the American Legislative Exchange Council (ALEC) released a report on the effect of state taxes on charitable giving. The report finds that states that levy higher taxes experience lower rates of growth in charitable giving.
“The level and growth of charitable giving is strongly related to the rates and burden of a given state’s taxes. Charity is at least in part a function of a citizen’s ability to pay and as their pocketbooks grow, they tend to give more. This tendency is particularly pronounced when tax changes affect how much wealth individuals have to potentially give to charity,” the report states.
The report examined data collected from the Internal Revenue Service between 1997 (the first year data was available) through 2012. It also separately measured charitable giving during 2008-2012 to see how giving was affected during the recession. The Wall Street Journal recently conducted an interview with William Freeland, research analyst for ALEC. The three-minute video of the interview is available below for more insight on the report. The full report can be downloaded here.