Ahead of the 2026 elections, a swath of Democrats in office and on the campaign trail are trying to curry favor with voters by calling for wealth taxes to fund a list of progressive policies, from dental and vision health insurance to universal child care. The most notable proposal, a ballot measure in California with potential retroactive enforcement, has already sparked a mass exodus of billionaire residents from the Golden State.
But targeting America’s 1% to provide greater social services could come with adverse effects on the United States’s robust nonprofit sector. After all, policies often have unintended consequences.
Charitable contributions to nonprofit organizations, from the well-known St. Jude Children’s Research Hospital to smaller groups such as my own Young Voices, often come from affluent people. According to Bank of America, roughly 81% of wealthy U.S. households make donations averaging over $30,000 per year.
ELIZABETH WARREN PROPOSES WEALTH TAX ON FAMILIES WITH OVER $50 MILLION
From homeless shelters and food banks to public health and economic research, the nonprofit sector depends on the goodwill of philanthropists. When that capacity to give is constrained, it is these front-line organizations — and the vulnerable populations they serve — that feel the impact first.
Despite facing recent scrutiny, large-scale philanthropy remains one of the most powerful and flexible tools for addressing social challenges. Over the past decade and a half, the Giving Pledge has attracted more than 240 billionaire signatories worldwide — nearly 10% of the global total at the time — who have pledged to donate at least half their wealth to charity.
This represents hundreds of billions of dollars directed toward solving problems that governments alone have struggled to address. Philanthropic giving is often more nimble than government spending, as private donors can respond quickly to emerging crises, fund innovative pilot programs, and support niche causes that may never rise to the top of a legislative agenda.
Wealth taxes risk disrupting this ecosystem. Sold as a minor hike, increases of 2%-5% directly hit the sliver of wealth that is often used for charitable giving. Millionaires and billionaires aren’t going to spend less on personal needs. Research shows that a mere 1% wealth tax increase can result in people cutting their charitable giving by 26%.
Even a modest decline in giving from top donors could translate into billions of dollars lost for nonprofit groups — forcing difficult trade-offs, program cuts, or even closures, and putting at risk the 12.8 million nonprofit jobs in America.
BERNIE SANDERS AND RO KHANNA PROPOSE BILLIONAIRE WEALTH TAX, SETTING STANDARD FOR LEFT
Proponents of wealth taxes argue that government redistribution is a more equitable and reliable way to fund social priorities. But this presents a false choice. A thriving society depends on both effective public institutions and a vibrant civil society. Weakening one in favor of the other is not a balanced approach — it’s a risky one. Rather than discouraging philanthropy, policymakers should look for ways to encourage it. Expanding charitable deductions, reducing overall taxation, and protecting donor privacy can ensure that private resources continue to complement public efforts.
If wealth taxes are enacted without careful consideration, the unintended consequence may be fewer resources flowing to the very organizations that serve those most in need. In the effort to do more good through government, we should be cautious not to undermine the good already being done every day by America’s philanthropic sector.
Casey Given is the president and executive director of Young Voices, a nonprofit public relations agency that places emerging libertarian writers in the media.