Tax Incentive and Charitable Giving: A Case of South Korea
Joint with Tsuyoshi Goto (Chiba University) and Yong-Rok Kim (Kobe University)
Many countries use a decrease of giving price through tax benefit to promote charitable giving. However, since a use of tax benefit leads to a decrease of governement’s revenue, it also reduces public goods provided by governement. Thus, a use of tax benefit depends on a benefit of charitable giving (increase private provision of public goods) and a cost of a decrease of public goods provided by governement. Our project estimates the price elasticity of giving using the 2014 tax reform in South Korea, and investigates how those who think that the tax is the best way of donations respond to the giving price.