More giving or more givers? The effects of tax incentives on charitable donations in the UK

Miguel Almunia, Irem Guceri, Ben Lockwood and Kimberley Scharf

Journal of Public Economics, 2020, vol. 183, issue C

Abstract: This paper estimates the effects of tax incentives on charitable contributions in the UK, using the universe of self-assessment income tax returns between 2005 and 2013. We exploit variation from a large reform in 2010 to estimate intensive- and extensive-margin tax-price elasticities of giving. Using a predicted-tax-rate instrument for the price of giving relative to consumption, we find an intensive-margin elasticity of about − 0.2 and an extensive-margin elasticity of − 0.1, yielding a total elasticity of about − 0.3. To further explore the extensive-margin response, we propose a model with a fixed cost of declaring donations and obtain a structural estimate of that cost of around £47. We also study the welfare effects of tax incentives, extending the theoretical literature to allow for extensive-margin giving and for a fixed cost of declaring donations. Taking into account these factors, there is a case for increasing the subsidy on charitable giving in the UK.

Keywords: Charitable donations; Incentive effects of taxation (search for similar items in EconPapers)
JEL-codes: D64 H24 H31 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

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Related works:
Working Paper: More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2019)
Working Paper: More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2017)
Working Paper: More Giving of More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2017)
Working Paper: More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:183:y:2020:i:c:s0047272719301768

DOI: 10.1016/j.jpubeco.2019.104114

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