Essays on Taxes and Donations.

Abstract

This dissertation concerns donation and tax issues, significant for current policy making. Chapter I considers cases where fundraisers reflect donors’ preferences for the characteristics of public good. Relying solely on voluntary contributions, public good is always under-provided. Among many countermeasures of this under-provision issue, some fundraisers take into account large donors’ preferences. We formalize such a mechanism and prove that this mechanism enhances private contributions because of additional incentive to donate. Moreover, we find that government direct subsidy may not only crowds-out but also crowds-in private contributions under this mechanism. Crowding-in may occur because the influence of one’s contribution is leveraged by direct subsidy. Crowding-out may occur because direct subsidy decreases marginal utility of public good. We analytically deduce the condition where crowding-in/crowding-out occurs. Chapter II is a collaborated work with Hasegawa, Hoopes and Slemrod. The behavioral response to public disclosure of income tax returns figures prominently in policy debates about its advisability. Although supporters stress that disclosure encourages tax compliance, policy debates proceed in the absence of empirical evidence about this, and any other, claimed behavioral impact. This paper provides the first such evidence by examining the behavioral response to the Japanese tax return public notification system. The analysis suggests that, when there is a threshold for disclosure, a non-trivial number of both individual and corporate taxpayers whose tax liability would otherwise be close to the threshold will under-report so as to avoid disclosure — a response in the opposite direction from that stressed by supporters of disclosure. An analysis of corporations’ financial data offers no evidence that these companies’ taxable income declined after the end of the disclosure system. Chapter III finds factors that associate with donations just after the two disastrous earthquakes in Japan, 2011 Tohoku Earthquake and 1995 Hanshin Earthquake, using household-level monthly panel data. The novel finding is that geographical distance from the disaster epicenter negatively associates with private donations, which may indicate that distance negatively correlates with sympathy. Also, one who donated before the earthquakes tends to donate after the earthquake. Moreover, income, saving and age are found to be positive factors.