Feb 27, 2018
In this week's episode (no. 20) - the second of our "Death & Taxes" two-parter, we look at the link between tax and philanthropy. Topics covered include:
Importance and Controversy: Why does tax relief on donations matter to understanding the role of philanthropy, and why has it proved controversial over the years? We touch on the current US situation in light of the Tax Cuts and Jobs Act, and look at previous political attempts to meddle with tax breaks on donations, such as Gladstone's one-man crusade in the late C19th and George Osborne's ill-fated 2012 Budget.
Justifying Philanthropic Tax Breaks: We explore three possible theoretical justifications, based on the work of Stanford academic Rob Reich, and conclude that only one works. We then see whether any of these has been used in practice, and compare the deliberate introduction of the US Charitable Deduction with the accidental introduction of donation incentives in the UK.
Do Philanthropic Tax Breaks Work? We look at whether tax incentives on donations are actually effective. We see that there is evidence they are correlated with greater generosity, but room for debate about how they are structured and at what level they are offered. We consider the difference between credit and deduction systems. We also look at recent findings from the University of Birmingham that Gift Aid might not be that effective as an incentive, and ask what this might mean for policymaking.
Related Giving Thought (and other) content
-The Justification for Charitable Tax Breaks
-Donation States: An international comparison of the tax treatment of donations
-Gross Domestic Philanthropy: An International Analysis of GDP, Tax & Giving
-Tax Incentives for Giving are Effective, Even in Low Income Countries
-The NAO on Gift Aid and Tax Relief on Donations
-Principles of Philanthropy Policymaking lecture (SLIDES) and (NOTES)
-Unversity of Birmingham paper on price elasticity (working paper and blog)