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Discussion Paper Details

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

Author(s): Miguel Almunia, Ben Lockwood and Kimberley Scharf

Publication Date: July 2017

Keyword(s): Donations, Tax policy and Tax Subsidies for Giving

Programme Area(s): Public Economics

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.

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Bibliographic Reference

Almunia, M, Lockwood, B and Scharf, K. 2017. 'More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12191