Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns

Julia Cagé and Malka Guillot
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Malka Guillot: ULiège - Université de Liège = University of Liège = Universiteit van Luik = Universität Lüttich

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Abstract: Is charitable giving politically motivated? In this article, we use exhaustive administrative household panel data and a natural experiment to quantify empirically the motivations for giving. Our dataset includes all the households filing their income tax and/or their wealth tax returns in France between 2006 and 2019. In France, both charitable and political donations benefit from a 66% income tax credit, but only the charitable ones are eligible for the 75% wealth tax credit. We exploit the 2017 wealth-tax reform – a change in the taxable base that led to a drop of two third in the number of liable households and, as a result, an increase in the price of charitable giving – and show that charitable and political donations are substitute. According to our estimates, a one-percent increase in the price of charitable giving leads to an increase of around 0.12% in political donations. Next, using city-level information, we show that the increase in the price of charitable giving mostly benefits pro-business political parties. Finally, we document that the drop in charitable donations is mostly driven by politically-involved nonprofit organizations, pointing toward political motivations behind charitable giving.

Keywords: Charitable giving; Political donations; Tax incentives for giving; Tax deductions; Wealth tax credit; Cross-elasticity of donations; Nonprofit organizations (search for similar items in EconPapers)
Date: 2021-06-30
New Economics Papers: this item is included in nep-pbe
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03877993v1
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Related works:
Working Paper: Is Charitable Giving Political? Evidence from Wealth and Income Tax Return (2023)
Working Paper: Is Charitable Giving Political? Evidence from Wealth and Income Tax Return (2023)
Working Paper: Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns (2022)
Working Paper: Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns (2021)
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