Abstract
The current U.S. income tax system subsidizes contributions to charities by allowing individual taxpayers to itemize and deduct contributions from taxable income. In effect, taxpayers can receive a rebate from the government based on the contributions they make to charitable organizations. Under one alternative system, the government matches the contributions of individual taxpayers at some rate between 0 percent and 100 percent. This paper explores the tax policy and administrative implications of matching rather than rebating contributions in a tax system with voluntary reporting. We conduct a novel experiment to examine both charitable giving and compliance behavior under the two regimes.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 91-116 |
| Number of pages | 26 |
| Journal | National Tax Journal |
| Volume | 65 |
| Issue number | 1 |
| DOIs | |
| State | Published - Mar 2012 |
Bibliographical note
Funding Information:Acknowledgments. This work was supported by: (1) The US Army Research Laboratory and US Army Research Officegrant W911NF-08-1-0470, (2) the grant RFBR 09-01-00273a from the Russian Foundation for Basic Research, (3) the Swedish Foundation for Strategic Research (SSF) at the Gothenburg Mathematical Modeling Center (GMMC), and (4) the Visby Program of the Swedish Institute.
Keywords
- Charitable contributions
- Experiment
- Income tax
- Match
- Rebate
- Reporting compliance
- Subsidy
