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More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK

Listed author(s):
  • Almunia, Miguel
  • Lockwood, Ben
  • Scharf, Kimberley
Registered author(s):

    This paper estimates the tax-price elasticity of giving using UK administrative tax return data, exploiting variation from a large tax reform. We estimate both the in- tensive and extensive-margin elasticity, using a novel instrumental variables strategy. Then, we derive new conditions to evaluate the welfare consequences of changes in the generosity of the subsidy to donations. We find a small intensive-margin elasticity of -0.2 and a substantial extensive-margin elasticity of -0.8, yielding a total elasticity of about -1. These estimates mask considerable heterogeneity: high-income individ- uals respond more on the intensive margin, while the extensive-margin response is stronger among low-income taxpayers.

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    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12191
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    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 12191.

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    Date of creation: Jul 2017
    Handle: RePEc:cpr:ceprdp:12191
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