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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, August.
    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. 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).
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. Shih-Ying Wu, 2004. "Tax Effects on Charitable Giving in the Presence of Uncertainty," Public Finance Review, , vol. 32(5), pages 459-482, September.
    9. 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.
    10. 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.
    11. 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.

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