Taxing and Subsidising Charitable Contributions
AbstractThis paper examines a model of charitable contributions in which there exist both warm-glow and public good motives for giving, but where the warm-glow motive is competitive in the sense that individuals evaluate their own contribution relative to that of their peers. In this setting, it is shown that tax-financed charitable contributions by the government completely crowd out private contributions as the competitive element of the warm-glow motive intensifies. This implies that the warm-glow assumption may not be the best way of explaining the empirical evidence on incomplete crowding out. It is also shown that the tax-deductibility of charitable contributions acts to strengthen the crowding-out effect, and that it can be optimal to tax charitable contributions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 09/23.
Date of creation:
Date of revision:
Contact details of provider:
Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
Fax: (0)1904 323759
Web page: http://www.york.ac.uk/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guesnerie Roger, 1976.
"On the direction of tax reform,"
CEPREMAP Working Papers (Couverture Orange)
- Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
- Diamond, Peter, 2006. "Optimal tax treatment of private contributions for public goods with and without warm glow preferences," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 897-919, May.
- Emmanuel Saez, 2000.
"The Optimal Treatment of Tax Expenditures,"
NBER Working Papers
8037, National Bureau of Economic Research, Inc.
- Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
- Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
- Andreoni, James & Petrie, Ragan, 2004.
"Public goods experiments without confidentiality: a glimpse into fund-raising,"
Journal of Public Economics,
Elsevier, vol. 88(7-8), pages 1605-1623, July.
- James Andreoni & Ragan Petrie, 2003. "Public Goods Experiments Without Confidentiality: A Glimpse Into Fund-Raising," Levine's Working Paper Archive 506439000000000520, David K. Levine.
- Duncan, Brian, 2004. "A theory of impact philanthropy," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2159-2180, August.
- Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
- Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
- Roberts, Russell D, 1984. "A Positive Model of Private Charity and Public Transfers," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 136-48, February.
- Rege, Mari & Telle, Kjetil, 2004. "The impact of social approval and framing on cooperation in public good situations," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1625-1644, July.
- Romano, Richard & Yildirim, Huseyin, 2001. "Why charities announce donations: a positive perspective," Journal of Public Economics, Elsevier, vol. 81(3), pages 423-447, September.
- Blumkin, Tomer & Sadka, Efraim, 2007. "A case for taxing charitable donations," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1555-1564, August.
- Atkinson, A.B., 2009. "Giving overseas and public policy," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 647-653, June.
- Sugden, Robert, 1982. "On the Economics of Philanthropy," Economic Journal, Royal Economic Society, vol. 92(366), pages 341-50, June.
- Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
- Kaplow, Louis, 1998. "Tax Policy and Gifts," American Economic Review, American Economic Association, vol. 88(2), pages 283-88, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paul Hodgson).
If references are entirely missing, you can add them using this form.