Subsidizing charitable contributions with a match instead of a deduction: What happens to donations and compliance?

Marsha Blumenthal, Laura Kalambokidis, Alex Turk

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

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 languageEnglish (US)
Pages (from-to)91-116
Number of pages26
JournalNational Tax Journal
Volume65
Issue number1
DOIs
StatePublished - Mar 2012

Keywords

  • Charitable contributions
  • Experiment
  • Income tax
  • Match
  • Rebate
  • Reporting compliance
  • Subsidy

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