We examine the impact of taxes and wasteful government spending on charitable giving. In our model, the government collects a flat-rate tax on income net of donations and wastes part of the tax revenue before redistribution. The model provides theoretical predictions which we test in a framed field experiment. The results of the experiment show that the tax rate has a weak and insignificant effect on giving. The degree of waste, however, has a large, negative and significant effect on giving, with the relationship moderated by the curvature in the utility function.
Sheremeta, R.M., & Uler, N. (2016). The impact of taxes and wasteful government spending on giving. ESI Working Paper 16-07. Retrieved from http://digitalcommons.chapman.edu/esi_working_papers/185/