A Study On The Incentive Effect Of Income Tax Preference Policies To Promote Corporate Charitable Giving

Charitable donations,as an important carrier of the third distribution,can essentially help the government to better realize its functions,which can not only make wealth redistribution in society,alleviate the rich-poor gap,promote the harmonious development of society and speed up the process of common prosperity,but also enhance the overall economic level of society and provide a more solid tax base for taxation,which has been fully confirmed during the new crown epidemic in 2020.Taxation is an essential policy tool for the state to regulate the distribution of national income and guide the behavior of enterprises.Although the tax benefits given by the state to corporate charitable donations will reduce part of the tax revenue,the reduced tax revenue is equivalent to the funding given by the government to donors or charitable causes,which is actually a tax-based expenditure and has a certain promotion effect on corporate charitable donations.China’s income tax preferential policies for corporate charitable donations have been continuously optimized and innovated,and the most recent major reform occurred in 2017,based on the 2008 preferential policy,which broke the time constraint on the pre-tax deduction of donations and allowed charitable donations over the limit to be carried forward for deduction in the next three years,further increasing the tax benefits and reducing the cost of corporate charitable donations.However,the actual effect of this income tax preferential policy adjustment and whether it has an incentive effect on corporate charitable donations need to be further studied.Based on the summary of research results from domestic and international academics,the article first analyzes the incentive effect and influence mechanism of income tax preferential policy on corporate charitable giving through Pareto optimal theory,resource dependence theory,strategic charity theory,third distribution theory and common wealth theory combined with cost-benefit and tax policy effect,using graphs and models.Secondly,this paper analyzes the overall development status and characteristics of charitable giving in China and compares the income tax policies related to corporate charitable donations in China,and finds that the current legislation on income tax preferential policies for corporate charitable donations is not perfect,mostly temporary regulations,and has not yet formed a system,and the scope of corporate charitable donations tax preferential is narrow,and the pre-tax deduction ratio also exists unreasonable,at the same time,the procedure for enterprises to enjoy income tax incentives for charitable donations is complicated,and there is still more room for the development of charity in China.On this basis,this paper selects2327 Shanghai and Shenzhen A-share listed companies as the research sample,with the sample interval from 2011 to 2020,and studies the incentive effect of income tax preferential policy adjustment on corporate charitable giving in 2017 through simple panel regression,and further analyzes the heterogeneity of corporate equity nature,state-owned enterprise level,political affiliation,geographical location,enterprise size,and profitability level by sub-sample.The empirical results indicate that the adjustment of income tax incentives for charitable giving in 2017 has a positive incentive effect on corporate charitable giving behavior,but the effect is limited.Further consideration of enterprise heterogeneity reveals that the policy adjustment has a significantly better incentive effect on charitable giving for non-state-owned enterprises than state-owned enterprises;it has an incentive effect on both central and local state-owned enterprises,but there is no significant difference;the incentive effect is greater for politically connected enterprises;the impact on the strength of charitable giving is greater for enterprises in the central and western regions;the incentive effect is better for small-scale enterprises than large-scale enterprises;the incentive effect of philanthropic giving is greater for enterprises with higher profitability.Finally,based on the theoretical analysis of the current situation and an interpretation of the empirical results,this paper puts forward suggestions for strengthening the construction of laws and regulations on corporate charitable giving income tax incentives,optimizing corporate charitable giving income tax incentives,develop differentiated corporate charitable giving income tax incentives,and improving corporate charitable giving income tax supporting measures.