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More giving or more givers? The effects of tax incentives on charitable donations in the UK
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Almunia, Miguel, Guceri, Irem, Lockwood, Ben and Scharf, Kimberley (2020) More giving or more givers? The effects of tax incentives on charitable donations in the UK. Journal of Public Economics, 183 . 104114. doi:10.1016/j.jpubeco.2019.104114 ISSN 0047-2727.
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Official URL: https://doi.org/10.1016/j.jpubeco.2019.104114
Abstract
This paper estimates the effects of tax incentives on charitable contributions in the UK, using the universe of self-assessment income tax returns between 2005 and 2013. We exploit variation from a large reform in 2010 to estimate intensive- and extensive-margin tax-price elasticities of giving. Using a predicted-tax-rate instrument for the price of giving relative to consumption, we find an intensive-margin elasticity of about − 0.2 and an extensive-margin elasticity of − 0.1, yielding a total elasticity of about − 0.3. To further explore the extensive-margin response, we propose a model with a fixed cost of declaring donations and obtain a structural estimate of that cost of around £47. We also study the welfare effects of tax incentives, extending the theoretical literature to allow for extensive-margin giving and for a fixed cost of declaring donations. Taking into account these factors, there is a case for increasing the subsidy on charitable giving in the UK.
Item Type: | Journal Article | ||||||||
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Subjects: | K Law [Moys] > KM Common Law, Public Law | ||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||
Library of Congress Subject Headings (LCSH): | Income tax deductions for charitable contributions -- Great Britain, Tax incentives -- Great Britain, Charitable bequests -- Great Britain | ||||||||
Journal or Publication Title: | Journal of Public Economics | ||||||||
Publisher: | Elsevier | ||||||||
ISSN: | 0047-2727 | ||||||||
Official Date: | March 2020 | ||||||||
Dates: |
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Volume: | 183 | ||||||||
Article Number: | 104114 | ||||||||
DOI: | 10.1016/j.jpubeco.2019.104114 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 14 January 2020 | ||||||||
Date of first compliant Open Access: | 3 February 2022 |
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