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Gifts to government

Author

Listed:
  • Joel Slemrod

    (University of Michigan)

  • Yulia Kuchumova

    (National Research University Higher School of Economics)

Abstract

Gifts to government might provide warm glow to some citizens, especially if they can be earmarked toward specific government activities. We develop a model in which such gifts may be privately worthwhile, even for those people who evade taxes, and describe the conditions under which this will be the case. The latter can occur when the warm glow of transferring money to the government via gifts is higher than the warm glow from transferring the money via paying taxes, and additionally, the marginal rate of substitution of warm glow from “donating” to the public good for private good is sufficiently high. We then conduct empirical analyses of explicit gifts to the US federal government over the last century. Although small compared to either federal taxes and expenditures or donations to charitable organizations, we show that they are systematically, although fairly weakly, related to measures of government fiscal activity. The war years and their immediate aftermath dominate the systematic relationships we uncover. This suggests that these gifts are not simply the random, and randomly timed, behavior of an unrepresentative sample of Americans and that this behavior might warrant further empirical analysis.

Suggested Citation

  • Joel Slemrod & Yulia Kuchumova, 2023. "Gifts to government," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(2), pages 453-492, April.
    • Handle: RePEc:kap:itaxpf:v:30:y:2023:i:2:d:10.1007_s10797-021-09715-9
    DOI: 10.1007/s10797-021-09715-9
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    References listed on IDEAS

    as
    1. Li, Sherry Xin & Eckel, Catherine C. & Grossman, Philip J. & Brown, Tara Larson, 2011. "Giving to government: Voluntary taxation in the lab," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1190-1201, October.
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    9. Joel Slemrod & Caroline Weber, 2012. "Evidence of the invisible: toward a credibility revolution in the empirical analysis of tax evasion and the informal economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 25-53, February.
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    More about this item

    Keywords

    Gifts; Charity; Tax; Evasion;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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