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Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches

Thomas Aronsson, Olof Johansson-Stenman () and Ron Wendner ()
Additional contact information
Thomas Aronsson: Dept of Economics, Umeå School of Business, Umeå University, Sweden
Olof Johansson-Stenman: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden, https://economics.gu.se/

No 807, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: This paper analyzes optimal taxation of charitable giving to a public good in a Mirrleesian framework with social comparisons. Leisure separability together with zero transaction costs of giving imply that charitable giving should be subsidized to such an extent that governmental contributions are completely crowded out, regardless of whether the government acknowledges warm glows of giving. Stronger concerns for relative charitable giving and larger transaction costs support lower marginal subsidies, whereas relative consumption concerns work in the other direction. A dual screening approach, where charitable giving constitutes an indicator of wealth, is also presents. Numerical simulations supplement the theoretical results.

Keywords: Conspicuous consumption; conspicuous charitable giving; optimal taxation; public good provision; warm glow; multiple screening (search for similar items in EconPapers)
JEL-codes: D03 D62 H21 H23 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2021-06
New Economics Papers: this item is included in nep-ltv, nep-pbe and nep-res
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Related works:
Working Paper: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2021) Downloads
Working Paper: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2021) Downloads
Working Paper: Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches (2021) Downloads
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