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More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK

Miguel Almunia (), Ben Lockwood () and Kimberley Scharf

No 12191, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper estimates the tax-price elasticity of giving using UK administrative tax return data, exploiting variation from a large tax reform. We estimate both the in- tensive and extensive-margin elasticity, using a novel instrumental variables strategy. Then, we derive new conditions to evaluate the welfare consequences of changes in the generosity of the subsidy to donations. We find a small intensive-margin elasticity of -0.2 and a substantial extensive-margin elasticity of -0.8, yielding a total elasticity of about -1. These estimates mask considerable heterogeneity: high-income individ- uals respond more on the intensive margin, while the extensive-margin response is stronger among low-income taxpayers.

Keywords: Donations; Tax policy; Tax Subsidies for Giving (search for similar items in EconPapers)
JEL-codes: D64 H24 H31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-eur, nep-pbe, nep-pub and nep-soc
Date: 2017-07
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Working Paper: More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2019) Downloads
Working Paper: More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2017) Downloads
Working Paper: More Giving of More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2017) Downloads
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