Is Charitable Giving by Nonitemizers Responsive to Tax Incentives? New Evidence

Christopher M. Duquette

National Tax Journal, 1999, vol. 52, issue 2, 195-206

Abstract: Was nonitemizer giving responsive to the 1982-6 "above-the-line" tax deduction provided for in the 1981 Economic Recovery Tax Act? Here, a Tobit model is applied to Treasury Individual Tax Model file data for 1985 and 1986 to estimate the price elasticity of nonitemizer giving. Nonitemizer giving is found to be price-responsive. The responsiveness is, however, smaller than that for itemizer giving (at least for 1986 when the nonitemizer deduction was fully phased in), suggesting diminishing returns from extending the itemizers-only deduction to nonitemizers. These findings also question whether the nonitemizer deduction can be touted as a highly efficient tax subsidy.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:52:y:1999:i:2:p:195-206

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