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Subsidizing Charitable Contributions With a Match Instead of a Deduction: What Happens to Donations and Compliance?

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  • Blumenthal, Marsha
  • Kalambokidis, Laura
  • Turk, Alex

Abstract

The current U.S. income tax system subsidizes contributions to charities by allowing individual taxpayers to itemize and deduct contributions from taxable income. In effect, taxpayers can receive a rebate from the government based on the contributions they make to charitable organizations. Under one alternative system, the government matches the contributions of individual taxpayers at some rate between 0 percent and 100 percent. This paper explores the tax policy and administrative implications of matching rather than rebating contributions in a tax system with voluntary reporting. We conduct a novel experiment to examine both charitable giving and compliance behavior under the two regimes.

Suggested Citation

  • Blumenthal, Marsha & Kalambokidis, Laura & Turk, Alex, 2012. "Subsidizing Charitable Contributions With a Match Instead of a Deduction: What Happens to Donations and Compliance?," National Tax Journal, National Tax Association, vol. 65(1), pages 91-116, March.
  • Handle: RePEc:ntj:journl:v:65:y:2012:i:1:p:91-116
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    References listed on IDEAS

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    1. Pablo Guillen & Robert F.Veszteg, 2006. "Subject Pool Bias in Economics Experiments," ThE Papers 06/03, Department of Economic Theory and Economic History of the University of Granada..
    2. James Alm & Kim M. Bloomquist & Michael McKee, 2015. "On The External Validity Of Laboratory Tax Compliance Experiments," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1170-1186, April.
    3. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, pages 681-701.
    4. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing Charitable Giving with Rebates or Matching: Further Laboratory Evidence," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 794-807, April.
    5. Jon Bakija & Bradley Heim, 2008. "How Does Charitable Giving Respond to Incentives and Income? Dynamic Panel Estimates Accounting for Predictable Changes in Taxation," NBER Working Papers 14237, National Bureau of Economic Research, Inc.
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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. Kimberley Scharf & Sarah Smith, 2015. "The price elasticity of charitable giving: does the form of tax relief matter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(2), pages 330-352, April.
    3. Roman M. Sheremeta & Neslihan Uler, 2016. "The Impact of Taxes and Wasteful Government Spending on Giving," Working Papers 16-07, Chapman University, Economic Science Institute.

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