We describe a fiscal choice model where individuals vote over levels of proportional income taxation and over tax incentives for giving, and investigate how tax incentives for giving affect political equilibrium outcomes. We show that the availability of tax incentives can cause a regime switch and induce a low income policymaker to select a private provision regime over a pure public provision regime even when the median voter is a donor.
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Find related papers by JEL classification: H2 - Public Economics - - Taxation, Subsidies, and Revenue H4 - Public Economics - - Publicly Provided Goods