Tax Framing in Matching and Rebate Subsidy

Seiyoun Kim, Vjollca Sadiraj and Yongsheng Xu

No 2023-01, Experimental Economics Center Working Paper Series from Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University

Abstract: We conduct a laboratory experiment to study individual decision on donating to a charity in response to changes in the tax rate and income in the presence of matching and two types of rebate subsidies: deterministic and stochastic. Private consumption is taxed, and contributions are subsidized in a way that preserves the relative price of giving across the fundraising mechanisms. We find that tax framing and rebate subsidy elicit less charitable contribution than neutral framing and matching subsidy; the negative effect on donation is smaller for stochastic than deterministic rebate subsidies. Data suggest that charitable giving is a normal good and that donations and private consumption are complements.

Keywords: charitable giving; tax deduction; rebate subsidy; matching subsidy; experiments (search for similar items in EconPapers)
JEL-codes: H41 (search for similar items in EconPapers)
Pages: 30
Date: 2024-02
New Economics Papers: this item is included in nep-exp, nep-mac, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:exc:wpaper:2023-01

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