The effect of tax price on donations evidence from Canada Ross Hickey, Brad Minaker, A. Abigail Payne, Joanne Roberts and Justin Smith
Contributor(s): Hickey, Ross
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Material type: 
ArticleSubject(s): IMPUESTOS | DONACIONES | BENEFICENCIA | GASTOS FISCALES | ELASTICIDAD IMPOSITIVA | CANADA
In:
National Tax Journal v. 76, n. 2, June 2023, p. 291-315Summary: We study the efficacy of nonrefundable tax credits for charitable donations in Canada. Using an instrumental variables estimator with a large longitudinal administrative data set, we estimate the tax price elasticity of giving. We estimate the tax price elasticity of giving for all tax filers and within quintiles of the distribution of household income. Our full sample elasticity estimate is −1.9, but we find evidence of larger estimates at the bottom of the distribution near −3 and −4. At the top quintile, we estimate this elasticity closer to −1. We find evidence throughout the distribution of income that the response to tax price occurs on both the decision to give or not and how much to give.
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We study the efficacy of nonrefundable tax credits for charitable donations in Canada. Using an instrumental variables estimator with a large longitudinal administrative data set, we estimate the tax price elasticity of giving. We estimate the tax price elasticity of giving for all tax filers and within quintiles of the distribution of household income. Our full sample elasticity estimate is −1.9, but we find evidence of larger estimates at the bottom of the distribution near −3 and −4. At the top quintile, we estimate this elasticity closer to −1. We find evidence throughout the distribution of income that the response to tax price occurs on both the decision to give or not and how much to give.
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