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February 03, 2016

Study Says Tax Rates Have Little Effect on Philanthropy

How much people give to charity is not influenced by whether they live in a country with high or low tax rates, according to new research cited by the Financial Times. The Charities Aid Foundation, a British organization that provides services to nonprofits, analyzed tax levels and giving data from 24 countries that collectively represent three-quarters of global gross domestic product and found no correlation.

"A good example is the Netherlands, which is a fairly high-taxation country, as is Italy, and they both outperform countries that are low-tax, such as China and Mexico," said Adam Pickering, the foundation's international policy manager. He said other factors, including the religiosity of a country's population and the health of its charity sector, have a greater bearing on philanthropy than overall tax rates, but that the amount of tax relief offered for giving can have an influence.