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The effect of tax price on donations: evidence from Canada

Author

Listed:
  • Ross Hickey

    (University of British Columbia Okanagan)

  • Brad Minaker

    (University of Guelph)

  • A. Abigail Payne

    (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne)

  • Joanne Roberts

    (Yale-NUS College)

  • Justin Smith

    (Wilfrid Laurier University)

Abstract

Using a large administrative dataset from Canada we estimate that the tax price elasticity of charitable donations is -1.9. When we allow for heterogeneity of this parameter across the income distribution, we observe a large elasticity at the bottom of the distribution between -3 and -4, and an elasticity closer to -1 at the top. We find evidence that the response to tax price occurs on both the intensive margin of how much to give, and the extensive margin of whether to give or not.

Suggested Citation

  • Ross Hickey & Brad Minaker & A. Abigail Payne & Joanne Roberts & Justin Smith, 2023. "The effect of tax price on donations: evidence from Canada," Melbourne Institute Working Paper Series wp2023n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2023n02
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    donations; charity; tax price elasticity;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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