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Is Charitable Giving by Nonitemizers Responsive to Tax Incentives? New Evidence

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  • Duquette, Christopher M.

Abstract

Was nonitemizer giving responsive to the 1982-6 "above-the-line" tax deduction provided for in the 1981 Economic Recovery Tax Act? Here, a Tobit model is applied to Treasury Individual Tax Model file data for 1985 and 1986 to estimate the price elasticity of nonitemizer giving. Nonitemizer giving is found to be price-responsive. The responsiveness is, however, smaller than that for itemizer giving (at least for 1986 when the nonitemizer deduction was fully phased in), suggesting diminishing returns from extending the itemizers-only deduction to nonitemizers. These findings also question whether the nonitemizer deduction can be touted as a highly efficient tax subsidy.

Suggested Citation

  • Duquette, Christopher M., 1999. "Is Charitable Giving by Nonitemizers Responsive to Tax Incentives? New Evidence," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 195-206, June.
    • Handle: RePEc:ntj:journl:v:52:y:1999:i:2:p:195-206
    DOI: 10.1086/NTJ41789389
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    References listed on IDEAS

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    1. Barrett, Kevin S., 1991. "Panel-Data Estimates of Charitable Giving: A Synthesis of Techniques," National Tax Journal, National Tax Association, vol. 44(3), pages 365-81, September.
    2. Clotfelter, Charles T., 1985. "Federal Tax Policy and Charitable Giving," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226110486.
    3. Barrett, Kevin S., 1991. "Panel-Data Estimates of Charitable Giving: A Synthesis of Techniques," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(3), pages 365-381, September.
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    Cited by:

    1. 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.
    2. Peter G. Backus & Nicky L. Grant, 2019. "How sensitive is the average taxpayer to changes in the tax-price of giving?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 317-356, April.
    3. Yamamura, Eiji & Tsutsui, Yoshiro & Ohtake, Fumio, 2018. "Altruistic and selfish motivations of charitable giving: The case of the hometown tax donation system (Furusato nozei) in Japan," MPRA Paper 86181, University Library of Munich, Germany.
    4. Shih-Ying Wu, 2004. "Tax Effects on Charitable Giving in the Presence of Uncertainty," Public Finance Review, , vol. 32(5), pages 459-482, September.
    5. Warren B. Hrung, 2004. "After‐Life Consumption and Charitable Giving," American Journal of Economics and Sociology, Wiley Blackwell, vol. 63(3), pages 731-745, July.
    6. David Eaton, 2001. "Charitable contributions and tax price elasticities for nonitemizing taxpayers," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 7(4), pages 431-442, November.
    7. Hannes Koppel & Günther G. Schulze, 2008. "Inefficient but Effective? A field experiment on the effectiveness of direct and indirect transfer mechanisms," MAGKS Papers on Economics 200802, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. Eiji Yamamura & Yoshiro Tsutsui & Fumio Ohtake, 2017. "Altruistic and selfish motivations of charitable giving:Case of the hometown tax donation system in Japan," ISER Discussion Paper 1003, Institute of Social and Economic Research, Osaka University.
    9. Eiji Yamamura & Yoshiro Tsutsui & Fumio Ohtake, 2023. "An analysis of altruistic and selfish motivations underlying hometown tax donations in Japan," The Japanese Economic Review, Springer, vol. 74(1), pages 29-55, January.
    10. Naomi E. Feldman, 2010. "Time Is Money: Choosing between Charitable Activities," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 103-130, February.
    11. Steven T Yen & Ernest M Zampelli, 2017. "Charitable Contributions of Time and Money: A Multivariate Sample Selection Approach," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(1), pages 43-63, January.

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