The Effect of Tax Price on Donations: Evidence from Canada

Ross Hickey, Bradley Minaker, A. Payne, Joanne Roberts and Justin Smith
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Joanne Roberts: Yale-NUS College
Justin Smith: Wilfrid Laurier University

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: Estimating the responsiveness of charitable donations to changes in tax incentives is more than estimating a single number. Giving to charity is unlike normal consumption – it involves supporting the delivery of privately-provided public goods. Age and income may influence how tax incentives to give affect both the decision to give as well as how much to give. Using a large administrative dataset from Canada to estimate the tax price elasticity of donations, we estimate that the tax price elasticity of charitable donations is -1 when it is restricted to be the same for all individuals. Across the income distribution, however, we observe an inverse U-shaped distribution in the elasticity that ranges from -1.4 to -0.18. We also find differences in the elasticity across age groupings, and that for the population the elasticity is driven more through the intensive than extensive margin.

Keywords: Donations; charity; tax price elasticity (search for similar items in EconPapers)
JEL-codes: H24 H31 H40 (search for similar items in EconPapers)
Pages: 47pp
Date: 2019-09
New Economics Papers: this item is included in nep-pbe and nep-pub
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Related works:
Journal Article: The Effect of Tax Price on Donations: Evidence from Canada (2023)
Working Paper: The effect of tax price on donations: evidence from Canada (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2019n08

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