 Charitable Donations and the Estate Tax: A Tale of Two HypothesesWilliam Beranek, David R. Kamerschen and Richard H. Timberlake American Journal of Economics and Sociology, 2010, vol. 69, issue 3, 1054-1078 Abstract: Regression studies have suggested that reducing estate‐tax rates would lead to a net reduction in total charitable donations distributed at death. Not only is this notion counterintuitive, our empirical analysis yields the contrary conclusion: overall donations would increase. In rationalizing this donation‐decline outcome, investigators have pointed to the tax deductibility of donations in assessing estate‐tax liability. These efforts, we show, are dubious. The view that donations will decline is also shown to be inconsistent with axioms of generally accepted economic theory. Two distinct sets of indifference curves that imply these two antithetical views are suggested, their observable predictions derived and compared to the relevant evidence, showing that the increasing‐donation hypothesis is confirmed, offering overall a clear challenge to the decline‐in‐donation position. Our empirical results suggest that most estate‐tax payers possess indifference curves consistent with those that embody the increasing‐donation hypothesis. Date: 2010 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:ajecsc:v:69:y:2010:i:3:p:1054-1078 Ordering information: This journal article can be ordered from Access Statistics for this article American Journal of Economics and Sociology is currently edited by Laurence S. Moss More articles in American Journal of Economics and Sociology from Wiley Blackwell |
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