Working Paper: NBER ID: w3273
Authors: Charles T. Clotfelter
Abstract: The purpose of this paper is to examine the predicted effects of tax reform in the 1980s (the tax acts of 1981 and 1986) on charitable contributions by individuals and to compare them to the actual and apparent effects, viewed from the perspective of 1989. The paper discusses what the economic models can and cannot be expected to do. Then, using published data from tax returns, the paper compares actual and predicted changes in giving as a result of both of the major tax reform acts. The paper concludes that the changes in contributions are quite consistent with the economic model of giving. As a result of these tax changes, average giving in high income classes declined. These results imply that tax policy should continue to be considered one important determinant of the level of individual charitable contributions.
Keywords: Tax Reform; Charitable Giving; Nonprofit Organizations
JEL Codes: H24; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tax reforms (H29) | Changes in charitable giving (D64) |
| Tax acts of 1981 (H26) | Net cost of charitable contributions (D64) |
| Net cost of charitable contributions (D64) | Charitable contributions (D64) |
| Tax acts of 1986 (H20) | Net cost of charitable contributions (D64) |
| Tax treatment changes under AMT (H26) | Overall charitable giving behavior (D64) |