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Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns

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Abstract

Is charitable giving politically motivated? In this article, we use exhaustive administrative household panel data and a natural experiment to quantify empirically the motivations for giving. Our dataset includes all the households filing their income tax and/or their wealth tax returns in France between 2006 and 2019. In France, both charitable and political donations benefit from a 66% income tax credit, but only the charitable ones are eligible for the 75% wealth tax credit. We exploit the 2017 wealth-tax reform – a change in the taxable base that led to a drop of two third in the number of liable households and, as a result, an increase in the price of charitable giving – and show that charitable and political donations are substitute. According to our estimates, a one-percent increase in the price of charitable giving leads to an increase of around 0.12% in political donations. Next, using city-level information, we show that the increase in the price of charitable giving mostly benefits pro-business political parties. Finally, we document that the drop in charitable donations is mostly driven by politically-involved nonprofit organizations, pointing toward political motivations behind charitable giving.
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Dates and versions

hal-03877993 , version 1 (29-11-2022)

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Attribution - NonCommercial - NoDerivatives - CC BY 4.0

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  • HAL Id : hal-03877993 , version 1

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Julia Cagé, Malka Guillot. Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns. 2021. ⟨hal-03877993⟩
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