The Effectiveness of Tax Credits for Charitable Giving

32 Pages Posted: 14 Jul 2018 Last revised: 5 Oct 2018

See all articles by Nicolas Duquette

Nicolas Duquette

University of Southern California

Alexandra Graddy-Reed

University of Southern California - Price School of Public Policy

Mark Phillips

University of Southern California - Sol Price School of Public Policy

Date Written: September 21, 2018

Abstract

State-level individual income tax credits for charitable giving are a common and often generous subsidy for donors but have not been examined holistically. This paper gathers novel panel data on each US state’s income tax credits for charitable contributions, identifying 46 credits in 23 states between 2000 and 2016. Generally, the credits target specific types of charitable giving and are more generous than federal and state charitable deductions, while not requiring taxpayers to itemize. These data are linked to the PSID/COPPS panel data on charitable giving to compute estimates of policy effects. Estimated policy effects are not statistically different from zero and are estimated with sufficient precision to rule out large effects. We conclude with a discussion of potential reasons states’ credits have little effect on giving.

Keywords: charitable giving, state income tax, tax credits

JEL Classification: D64, H41, H71

Suggested Citation

Duquette, Nicolas and Graddy-Reed, Alexandra and Phillips, Mark, The Effectiveness of Tax Credits for Charitable Giving (September 21, 2018). Available at SSRN: https://ssrn.com/abstract=3201841 or http://dx.doi.org/10.2139/ssrn.3201841

Nicolas Duquette (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

HOME PAGE: http://www.nicolasduquette.com

Alexandra Graddy-Reed

University of Southern California - Price School of Public Policy ( email )

Lewis Hall 312
Los Angeles, CA 90089-062
United States

Mark Phillips

University of Southern California - Sol Price School of Public Policy ( email )

Lewis Hall 300
650 Childs Way
Los Angeles, CA 90089-0626
United States

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