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Identification in Tax-Price Regression Models: The Case of Charitable Giving

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  • Daniel R. Feenberg

Abstract

In this paper we use an instrumental variable estimator to exploit sources of independent variation, which allows unbiased estimation of the tax-price elasticity under more general conditions. The estimator is applied to the demand for charitable giving. A charitable giving equation is an appropriate test for this procedure because it represents the purest case of a tax-price coefficient. That is, taxes are the sole source of variance in the price. The deduction is also an important policy issue. In 1982, 1.8 percent of gross income was deducted for this reason, about as much as the capital gains deduction.

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  • Daniel R. Feenberg, 1982. "Identification in Tax-Price Regression Models: The Case of Charitable Giving," NBER Working Papers 0988, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0988
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    References listed on IDEAS

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    1. S. Rosen, Harvey, 1987. "Studies in state and local public finance," Business Horizons, Elsevier, vol. 30(3), pages 84-85.
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    7. Clotfelter, Charles T., 1980. "Tax incentives and charitable giving: evidence from a panel of taxpayers," Journal of Public Economics, Elsevier, vol. 13(3), pages 319-340, June.
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    9. Feldstein, Martin S & Taylor, Amy, 1976. "The Income Tax and Charitable Contributions," Econometrica, Econometric Society, vol. 44(6), pages 1201-1222, November.
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    Cited by:

    1. Poterba, James M, 1987. "Tax Evasion and Capital Gains Taxation," American Economic Review, American Economic Association, vol. 77(2), pages 234-239, May.
    2. Lawrence B. Lindsey, 1985. "The Effect of the Treasury Proposal on Charitable Giving: A Comparison of Constant and Variable Elasticity Models," NBER Working Papers 1592, National Bureau of Economic Research, Inc.

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