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Tax Framing in Matching and Rebate Subsidy

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Listed:
  • Seiyoun Kim
  • Vjollca Sadiraj
  • Yongsheng Xu

Abstract

We conduct a laboratory experiment to study individual decision on donating to a charity in response to changes in the tax rate and income in the presence of matching and two types of rebate subsidies: deterministic and stochastic. Private consumption is taxed, and contributions are subsidized in a way that preserves the relative price of giving across the fundraising mechanisms. We find that tax framing and rebate subsidy elicit less charitable contribution than neutral framing and matching subsidy; the negative effect on donation is smaller for stochastic than deterministic rebate subsidies. Data suggest that charitable giving is a normal good and that donations and private consumption are complements.

Suggested Citation

  • Seiyoun Kim & Vjollca Sadiraj & Yongsheng Xu, 2024. "Tax Framing in Matching and Rebate Subsidy," Experimental Economics Center Working Paper Series 2023-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:exc:wpaper:2023-01
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    File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2023-01.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    charitable giving; tax deduction; rebate subsidy; matching subsidy; experiments;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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