THE INCOME TAX AND CHARITABLE CONTRIBUTIONS: PART I—AGGREGATE AND DISTRIBUTIONAL EFFECTS

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Abstract
Because charitable contributions are deductible in defining taxable income, the "price" of such gifts is less than the price of other consumption. This paper assesses the importance of this price effect by using a pooled time series of cross sections of charitable contributions by income class for the period 1948 through 1968 to estimate price and income elasticities. Alternative estimates of the price elasticity are generally greater than one and the cluster around 1.1. These results indicate that charitable contributions are increased substantially by the current provision of deductibility.

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