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Do tax incentives affect charitable contributions? Evidence from public charities' reported revenues

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  • Duquette, Nicolas J.
Abstract
This paper estimates the effect of the charitable contribution tax deduction on charities' donation revenue from charities' tax filings. A one percent increase in the tax cost of giving causes charitable receipts to fall by about four percent, an effect three times larger the consensus in the literature. Further analysis reveals substantial heterogeneity in the tax response by subsector: health care and home care are more tax-sensitive than other charities, while higher education and arts are less tax-sensitive. The results are consistent with substantial tax response heterogeneity within the sample and between sampled and unsampled charities, implying that the mean tax elasticity of charitable contributions is a poor predictor of tax incentive effects for individual charities.

Suggested Citation

  • Duquette, Nicolas J., 2016. "Do tax incentives affect charitable contributions? Evidence from public charities' reported revenues," Journal of Public Economics, Elsevier, vol. 137(C), pages 51-69.
    • Handle: RePEc:eee:pubeco:v:137:y:2016:i:c:p:51-69
    DOI: 10.1016/j.jpubeco.2016.02.002
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    More about this item

    Keywords

    Charitable giving; Taxation; Tax deduction; United States;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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