Wealth Taxation and Charitable Giving

Abstract

We use third-party reported data and two quasi-experiments from Norway to study how tax incentives affect charitable giving. First, using a shock to wealth tax exposure, we estimate the semi-elasticity of giving with respect to the after-tax return on wealth. Inconsistent with the notion that households accelerate giving to reduce future taxes, we find that a 1% wealth tax reduces giving by 26%. Second, using bunching at an income-tax deduction threshold, we estimate a moderate own-price elasticity of giving of -0.44. This elasticity exhibits little heterogeneity with respect to income and wealth but is considerably larger for religious giving.

Keywords: Wealth taxation, charitable giving, capital taxation

JEL Classification: H20,H24,H31,H41