IDEAS home Printed from https://ideas.repec.org/p/tul/wpaper/1606.html
   My bibliography  Save this paper

Do Tax Credits Increase Charitable Giving? Evidence from Arizona and Iowa

Author

Listed:
  • Daniel Teles

    (Department of Economics, Tulane University)

Abstract

The majority of U.S. states have implemented tax credits that encourage donating to specific classes of nonprofits. However, the effect on the nonprofits themselves is unknown. This paper estimates the causal effect of two of the costliest programs. Arizona's Working Poor Tax Credit (WPTC) and the Endow Iowa Tax Credit (Endow Iowa) provide stark contrast for analysis. The WPTC, the largest tax credit for charitable giving in terms of tax expenditure, provides a broadly targeted 100 percent credit with a cap of $200 per person. Endow Iowa provides a sharply targeted 25 percent credit with a cap of $300,000 per tax-payer. A model of donor budget constraints and preferences suggests that Endow Iowa has greater potential to induce large increases in contributions to its targeted charities than does the WPTC. Using synthetic control methods to construct counterfactuals, I estimate a 125 percent increase in contributions to community foundations in Iowa. In contrast, I find no evidence that the WPTC increased contributions to the targeted Arizona nonprofits. Evidence suggests that the growth in contribution levels in Iowa included increases in both the number of community foundations and the level of contributions per foundation.

Suggested Citation

  • Daniel Teles, 2016. "Do Tax Credits Increase Charitable Giving? Evidence from Arizona and Iowa," Working Papers 1606, Tulane University, Department of Economics, revised Oct 2016.
    • Handle: RePEc:tul:wpaper:1606
    as

    Download full text from publisher

    File URL: http://repec.tulane.edu/RePEc/pdf/tul1606r.pdf
    File Function: Revised Version, October 2016
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Tinkelman, 2010. "Revenue Interactions: Crowding Out, Crowding In, Or Neither?," Chapters, in: Bruce A. Seaman & Dennis R. Young (ed.), Handbook of Research on Nonprofit Economics and Management, chapter 2, Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. James Alm & Daniel Teles, 2018. "State and federal tax policy toward nonprofit organizations," Chapters, in: Bruce A. Seaman & Dennis R. Young (ed.), Handbook of Research on Nonprofit Economics and Management, chapter 19, pages 370-385, Edward Elgar Publishing.
    2. Duquette, Nicolas J., 2019. "Do share-of-income limits on tax-deductibility of charitable contributions affect giving?," Economics Letters, Elsevier, vol. 174(C), pages 1-4.
    3. Anubhav Gupta & Thomas Luke Spreen, 2024. "Do tax credits benefit charities? Evidence from two states," Contemporary Economic Policy, Western Economic Association International, vol. 42(1), pages 94-109, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.

      More about this item

      Keywords

      Tax credits; tax incentive; subsidies; state taxation; charity; nonprofits; philanthropy.;
      All these keywords.

      JEL classification:

      • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
      • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
      • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
      • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
      • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

      NEP fields

      This paper has been announced in the following NEP Reports:

      Statistics

      Access and download statistics

      Corrections

      All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tul:wpaper:1606. See general information about how to correct material in RePEc.

      If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

      If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

      If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

      For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kerui Geng (email available below). General contact details of provider: https://edirc.repec.org/data/detulus.html .

      Please note that corrections may take a couple of weeks to filter through the various RePEc services.

      IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.