Tuesday, August 18, 2020

Philanthropy—or tax-exempt lobbying?

I pass on this piece by Brad Wible from the Editors' Choice section of the current issue of Science Magazine:
Major corporations appear to fund their charitable foundations in part to cater to politicians who are important to the firm's profitability. Integrating corporate tax returns, lobbying data, and data on U.S. congressional committee assignments, Bertrand et al. show that donations from a given corporate-funded foundation to charities in a particular congressional representative's district, or for which a congressional representative is a board member, ebb and flow according to whether the representative sits on a committee that is of interest to the corporation. The patterns parallel spending by political action committees (PACs). Around 7% of charitable giving (∼$1.2 billion annually) appears to be politically motivated, amounting to about 2.5 times the annual PAC spending and one-third of the total federal lobbying spending—and it is tax exempt and thus subsidized by taxpayers.
Am. Econ. Rev. 110, 2065 (2020).

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