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Tax-price elasticity of charitable donations: Evidence from the German taxpayer panel

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  • Adena, Maja

Abstract

I estimate permanent and transitory tax-price and income elasticity of charitable giving in Germany using a rich panel data of tax return for the years 2001-2006. Income tax reforms were implemented in 2004 and 2005. The results suggest that the permanent tax-price elasticity varies significantly by income class, ranging from -0.2 for low incomes to -1.6 for higher incomes. Permanent income elasticity does not vary much among income classes, is rather low, and ranges between 0.2-0.3. The donors adjust their donations gradually after changes in the tax schedule and respond to future predictable changes in price. They respond to changes in current and, to a smaller extent, in future income. -- In dieser Studie wurde die permanente und transitorische Steuerpreis- und Einkommenselastizität der Spenden in Deutschland geschätzt. Basis für die Schätzung ist das umfangreiche Taxpayer-Panel, welches alle Steuermerkmale der Steuerzahler in Deutschland für die Jahre 2001-2006 erfasst. Die Ergebnisse suggerieren, dass die permanente Steuerpreiselastizität, je nach Einkommensklasse, sich stark unterscheidet; sie reicht von -0.2 für niedrige Einkommen bis -1.6 für höhere Einkommen. Dahingegen ist die permanente Einkommenselastizität für unterschiedliche Einkommensklassen ähnlich; insgesamt ist sie sehr niedrig und liegt zwischen 0.2 und 0.3. Spender passen ihre Spendenentscheidung nach Steueränderungen verzögert an, sie reagieren auch auf zukünftige vorausschaubare Preisänderungen. Sie reagieren auf aktuelle und weniger auf zukünftige Änderungen des Einkommens.

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Bibliographic Info

Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Economics of Change with number SP II 2014-302.

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Date of creation: 2014
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Handle: RePEc:zbw:wzbeoc:spii2014302

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Keywords: charitable giving; price elasticity; tax incentives;

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  1. Jon Bakija & Bradley Heim, 2008. "How Does Charitable Giving Respond to Incentives and Income? New Estimates from Panel Data," Department of Economics Working Papers, Department of Economics, Williams College 2008-01, Department of Economics, Williams College, revised Jun 2011.
  2. Feldstein, Martin S & Taylor, Amy, 1976. "The Income Tax and Charitable Contributions," Econometrica, Econometric Society, Econometric Society, vol. 44(6), pages 1201-22, November.
  3. Timm Bönke & Nima Massarrat-Mashhadi & Christian Sielaff, 2013. "Charitable giving in the German welfare state: fiscal incentives and crowding out," Public Choice, Springer, Springer, vol. 154(1), pages 39-58, January.
  4. Triest, Robert K., 1998. "Econometric Issues in Estimating the Behavioral Response to Taxation: A Nontechnical Introduction," National Tax Journal, National Tax Association, vol. 51(n. 4), pages 761-72, December.
  5. Gabrielle Fack & Camille Landais, 2010. "Are Tax Incentives for Charitable Giving Efficient? Evidence from France," NBER Chapters, in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 117-141 National Bureau of Economic Research, Inc.
  6. Robert Mcclelland & Arthur C. Brooks, 2004. "What is the Real Relationship between Income and Charitable Giving?," Public Finance Review, , , vol. 32(5), pages 483-497, September.
  7. Honore, Bo E, 1992. "Trimmed LAD and Least Squares Estimation of Truncated and Censored Regression Models with Fixed Effects," Econometrica, Econometric Society, Econometric Society, vol. 60(3), pages 533-65, May.
  8. Borgloh, Sarah, 2008. "What Drives Giving in Extensive Welfare States? The Case of Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 08-123, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Clotfelter, Charles T., 1980. "Tax incentives and charitable giving: evidence from a panel of taxpayers," Journal of Public Economics, Elsevier, Elsevier, vol. 13(3), pages 319-340, June.
  10. Clotfelter, Charles T, 1980. "Tax Incentives and Charitable Giving: Evidence from a Panel of Taxpayers," Empirical Economics, Springer, Springer, vol. 13(3), pages 319-40, June.
  11. Randolph, William C, 1995. "Dynamic Income, Progressive Taxes, and the Timing of Charitable Contributions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(4), pages 709-38, August.
  12. Jon Bakija, 2000. "Distinguishing Transitory and Permanent Price Elasticities of Charitable Giving with Pre-Announced Changes in Tax Law," Department of Economics Working Papers, Department of Economics, Williams College 2000-06, Department of Economics, Williams College.
  13. Barrett, Kevin S. & McGuirk, Anya M. & Steinberg, Richard S., 1997. "Further Evidence on the Dynamic Impact of Taxes on Charitable Giving," National Tax Journal, National Tax Association, vol. 50(2), pages 321-34, June.
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