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Tax Expenditures for Noncash Charitable Contributions

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  • Ackerman, Deena
  • Auten, Gerald

Abstract

This paper examines the itemized deduction for donations of property to charitable organizations, its benefits to charitable organizations and their beneficiaries, and the associated tax expenditures. In 2005, taxpayers deducted $48 billion in noncash donations, resulting in a tax expenditure of $9 billion. High-income taxpayers primarily donated stock and other appreciated property, thereby also avoiding the capital gains tax liability due on appreciation of the assets had they been sold, while middle-income taxpayers primarily donated used clothing and household items. We focus on donations of vehicles using tax and online vehicle auction data. Taxpayer valuations are compared with auction prices of vehicles of the same make, model, and year. The results imply that either taxpayers are overstating the likely value of their vehicle or donating vehicles of higher average quality than those sold in online auctions. Donations of vehicles and vehicle valuations declined substantially after tax reforms were enacted in 2004.

Suggested Citation

  • Ackerman, Deena & Auten, Gerald, 2011. "Tax Expenditures for Noncash Charitable Contributions," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 651-687, June.
  • Handle: RePEc:ntj:journl:v:64:y:2011:i:2:p:651-87
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    References listed on IDEAS

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    1. Ackerman, Deena & Auten, Gerald, 2006. "Floors, Ceilings, and Opening the Door for a Non–Itemizer Deduction," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(3), pages 509-530, September.
    2. Bakija, Jon & Heim, Bradley T., 2011. "How Does Charitable Giving Respond to Incentives and Income? New Estimates From Panel Data," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 615-650, June.
    3. Gerald E. Auten & Holger Sieg & Charles T. Clotfelter, 2002. "Charitable Giving, Income, and Taxes: An Analysis of Panel Data," American Economic Review, American Economic Association, vol. 92(1), pages 371-382, March.
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    Cited by:

    1. Eiji Yamamura & Yoshiro Tsutsui & Fumio Ohtake, 2017. "Altruistic and selfish motivations of charitable giving:Case of the hometown tax donation system in Japan," ISER Discussion Paper 1003, Institute of Social and Economic Research, Osaka University.
    2. Fack, Gabrielle & Landais, Camille, 2016. "The effect of tax enforcement on tax elasticities: Evidence from charitable contributions in France," Journal of Public Economics, Elsevier, vol. 133(C), pages 23-40.
    3. Bakija, Jon & Heim, Bradley T., 2011. "How Does Charitable Giving Respond to Incentives and Income? New Estimates From Panel Data," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 615-650, June.
    4. Sara LaLumia & James M. Sallee & Nicholas Turner, 2015. "New Evidence on Taxes and the Timing of Birth," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 258-293, May.
    5. Yamamura, Eiji & Tsutsui, Yoshiro & Ohtake, Fumio, 2018. "Altruistic and selfish motivations of charitable giving: The case of the hometown tax donation system (Furusato nozei) in Japan," MPRA Paper 86181, University Library of Munich, Germany.

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