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The effect of tax rates and uncertainty on contributory crowding out

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  • Cynthia Benzing
  • Thomas Andrews

Abstract

This uncertain dictator experiment found support for partial crowding out. Ninety-seven percent of private contributions were crowded out when tax rates were increased from 0 to 10 percent of income. Subjects who were uncertain whether they would be the donor or charity recipient pledged larger contributions and had lower levels of crowding out. Crowding out appeared asymmetric in that decreases in government contributions did not stimulate equivalent increases in private contributions. In the case of certainty, donors actually decreased contributions when government contributions decreased. The donor's gender did not influence contributory behavior. Copyright International Atlantic Economic Society 2004

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  • Cynthia Benzing & Thomas Andrews, 2004. "The effect of tax rates and uncertainty on contributory crowding out," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 32(3), pages 201-215, September.
    • Handle: RePEc:kap:atlecj:v:32:y:2004:i:3:p:201-215
    DOI: 10.1007/BF02299438
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