ABSTRACT
We focus on two considerations in evaluating tax incentives for giving that we feel are relevant to policy-makers, as well as to several other chapters in this volume. First is tax efficiency, meaning their effect on the incomes of charities. Estimating tax-price elasticities has been a longstanding focus in economics, but recent behavioral insights highlight the additional importance of the design and framing of tax incentives for determining the response of donations, including tax salience, thresholds, and social norms. Second is social efficiency, which is the wider impact of tax incentives for the level and composition of public goods and services. Social efficiency means that tax incentives should aim to improve the social benefit of charity while also giving voice to citizens. Understanding the immediate social impact of tax-favored giving is an important part of this, but social efficiency considerations also encompass discussion of what it means to have a healthy charitable sector and a strong civil society and the role of tax subsidies in promoting these ideals.
