Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches

Thomas Aronsson (), Olof Johansson-Stenman () and Ron Wendner
Additional contact information
Thomas Aronsson: Umea University
Olof Johansson-Stenman: University of Gothenburg

No 2024-05, Graz Economics Papers from University of Graz, Department of Economics

Abstract: This paper analyzes optimal taxation of charitable giving to a public good in a Mirrleesian framework with social comparisons. When there are no transaction costs of giving, charitable giving should be subsidized to such an extent that government contributions are completely crowded out, regardless of whether the government is welfarist or non-welfarist, in which case it does not acknowledge the warm glow of giving. Under welfarism, stronger concerns for relative charitable giving support lower marginal subsidies, whereas relative consumption concerns work in the opposite direction. We also show that a simple flat-rate subsidy is optimal under welfarism, while the marginal subsidy increases in income under non-welfarism.

Keywords: Conspicuous charitable giving; conspicuous consumption; optimal taxation; public good provision; warm glow. (search for similar items in EconPapers)
JEL-codes: D03 D62 H21 H23 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-pbe
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2024)
Working Paper: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2021)
Working Paper: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2021)
Working Paper: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2021)
Working Paper: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2021)
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