Working Paper: NBER ID: w0988
Authors: Daniel Feenberg
Abstract: In this paper we use an instrumental variable estimator to exploit sources of independent variation, which allows unbiased estimation of the tax-price elasticity under more general conditions. The estimator is applied to the demand for charitable giving. A charitable giving equation is an appropriate test for this procedure because it represents the purest case of a tax-price coefficient. That is, taxes are the sole source of variance in the price. The deduction is also an important policy issue. In 1982, 1.8 percent of gross income was deducted for this reason, about as much as the capital gains deduction.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| state tax laws (H71) | tax-price elasticity of charitable giving (D64) |
| taxes (H29) | charitable giving (D64) |
| marginal tax rates (H29) | tax prices (H29) |
| tax-price elasticity of charitable giving (D64) | charitable giving (D64) |