8
Key Changes in Tax
Law for Corporations
Tax Law
Source: Ryan Ellis, " Nine in Ten Will Claim The Standard Deduction Under Tax Reform According To New White House Study," Forbes, November 22, 2017.
Corporate Tax Rate Reduced from 35% to 21%
Corporate Profits Are on the Rise
Corporations enjoy a tremendous reduction in tax liability
thanks to tax reform. At a 21% tax rate, companies have
nearly halved their tax rate from a previous rate of 35%.
Going forward, this will allow corporations to become more
profitable. As the rising stock market has demonstrated,
corporate earnings have been growing in recent years - even
before the tax cuts.
Higher corporate profitability will benefit the broader
economy. Nonprofits will benefit in four specific ways.
1. Increased share prices, buy backs, and dividends give
individuals and foundations more earnings, so they can
increase contributions.
2. Increased profits allow companies to hire more workers,
pay higher wages, and award more bonuses—all of which
puts more money in the pockets of individuals and
households. This should increase their charitable giving.
3. Corporations will have more marketing funds to partner
directly with charitable organizations. Marketing activities
receive a 100% write off on corporate taxes.
4. Corporations will have more earnings to earmark for
charitable giving programs. Charitable dollars receive a
50% write-off on corporate taxes.
