THE IMPACT OF THE 1981 TAX ACT ON INDIVIDUAL CHARITABLE GIVING

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Abstract
Using a model based on previous econometric studies of charitable giving, this paper projects the effects of the 1981 tax act on contributions by individuals. Among other provisions, the act will reduce marginal tax rates for taxpayers with high incomes and will introduce a charitable deduction for nonitemizers. The simulation model projects that aggregate giving will increase in real terms between 1980 and 1984, but at a slower rate than would have been the case under the previous law. The share of giving coming from upper income taxpayers will fall, resulting in large increases in religious gifts and probably a reduction in giving to hospitals and educational institutions.

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