A case for taxing charitable donations

Blumkin, Tomer; Sadka, Efraim

doi:10.1016/j.jpubeco.2007.02.003

Cited by 26 publications

(23 citation statements)

References 13 publications

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“…We find that charitable giving should under certain conditions be subsidized at the margin in a second-best optimum, which runs counter to the finding of Blumkin and Sadka (2007a), who also analyze a status motive for charitable giving. In addition, the role of stigma effects of receiving charity, which to our knowledge has never been analyzed in the context of optimal taxation, turns out to be potentially very important and tends to weaken the case for subsidizing charity.…”

Section: Introductioncontrasting

confidence: 96%

“…To our knowledge, the only earlier study dealing with policy implications of conspicuous charitable giving is that by Blumkin and Sadka (2007a). They consider an innovative model 5 in which charitable giving signals wealth, while neglecting the possible "warm glow" motive for charitable giving 3 as well as stigma effects and status related to relative consumption.…”

Section: Introductionmentioning

confidence: 99%

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Redistribution Through Charity and Optimal Taxation When People Are Concerned with Social Status

2016

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This paper deals with tax policy responses to charitable giving based on a model of optimal redistributive income taxation. The major contribution is the simultaneous treatment of (i) warm-glow and stigma effects of charitable donations; (ii) that the warm glow of giving and stigma of receiving charity may to some extent depend on relative comparisons; and (iii) that people are also concerned with their relative consumption more generally. Whether charity should be taxed or supported turns out to largely depend on the relative strengths of the warm glow of giving and the stigma of receiving charity, respectively, and on the positional externalities caused by charitable donations. In addition, imposing stigma on the mimicker (via a relaxation of the self-selection constraint) strengthens the case for subsidizing charity.We also consider a case where the government is unable to target the charitable giving through a direct tax instrument, and examine how the optimal marginal income tax structure is adjusted in response to charitable giving.

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Section: Introductioncontrasting

confidence: 96%

Section: Introductionmentioning

confidence: 99%

Redistribution Through Charity and Optimal Taxation When People Are Concerned with Social Status

2016

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“…Thus, from an egalitarian perspective, the case for exempting donations to, say, churches, temples, museums, art galleries, opera houses, sports clubs, community centers, public parks, universities, elite private schools, private hospitals etc., from taxation appears questionable. 4 Our analysis points to the need for further empirical evaluation of this issue in specific policy contexts.…”

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confidence: 90%

“…While the optimal taxation literature has done much to clarify the theoretical limits to redistribution, it seems unlikely that any country at present is actually taxing at those limits. Blumkin and Sadka [4,5] have offered arguments against the substitution-effect case.…”

mentioning

confidence: 99%

“…Traditional political hierarchies in many countries base much of their ideological appeal on such notions of public function. 4 For example, the publicized priorities of the Gates-Buffet project, or those of George Soros, would appear to be broadly in accord when considered globally, but not self-evidently so when considered in the restricted context of American society. Few Americans are likely to experience a significant rise in their private consumption from improvements in malaria medicines.…”

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confidence: 99%

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