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

Miguel Almunia, Benjamin Lockwood and Kimberley Ann Scharf

No 6591, CESifo Working Paper Series from CESifo

Abstract: This paper estimates the intensive and extensive-margin tax-price elasticities of giving using UK administrative tax return data, exploiting variation from a large tax reform. Using a variety of estimation methods and new instruments for the tax-price of giving, we find an intensive-margin elasticity of about -0.25 and an extensive-margin elasticity of -0.1, yielding a total elasticity of about -0.35. These estimates mask considerable heterogeneity: high-income individuals respond more on the intensive margin, while the extensive-margin response is stronger for low-income taxpayers. We then derive new conditions to evaluate the welfare consequences of changes in the subsidy to donations. This analysis shows that these elasticities can only be rationalized as being optimal if the UK government places a large enough value on providing warm-glow opportunities for UK donors.

Keywords: tax policy; charitable giving (search for similar items in EconPapers)
JEL-codes: D64 H24 H31 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-eur and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: More giving or more givers? The effects of tax incentives on charitable donations in the UK (2020)
Working Paper: More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2019)
Working Paper: More Giving of More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2017)
Working Paper: More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK (2017)
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