International Tax and Public Finance

, Volume 22, Issue 2, pp 330–352

The price elasticity of charitable giving: does the form of tax relief matter?

Article

DOI: 10.1007/s10797-014-9306-3

Cite this article as:
Scharf, K. & Smith, S. Int Tax Public Finance (2015) 22: 330. doi:10.1007/s10797-014-9306-3

Abstract

We use a survey-based approach to compare the effects of alternative forms of tax relief on donations—a tax rebate for the donor and a matched payment to the charity. On accounting grounds these two are equivalent but, in line with earlier experimental studies, we find that charitable contributions are significantly more responsive to a match than to a rebate. The difference can largely be explained by the fact that a majority of donors do not adjust their nominal donations in response to a change in subsidy. We relate our findings to the growing literature on behavioural tax policy.

Keywords

Charitable giving Tax incentives Match and rebate Salience 

JEL classification

H2 D0 D8 

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Department of EconomicsWarwick UniversityCoventry UK
  2. 2.CMPO and Department of EconomicsUniversity of BristolBristolUK

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