When looking at data like this, one can make the mistake of drawing an equivalence between charitable giving and helping those in need. For instance, when we see a statistic that says an X dollar cut in taxes results in a Y dollar increase in charitable giving, we tend to think of those Y dollars as going to help the poor. But not all of that money goes to help the poor. In fact, for religious people, probably the largest part of their charitable donation is used to support directly their own church infrastructure. That is, to pay the electric bill, the heating bill, the building maintenance, the staff salaries. This is all good and laudable, and does facilitate the spreading of the gospel. But it does not replace material assistance for those in need. Of course, the X dollars that was not collected as tax would not have all gone to help the poor either. In fact, I will even allow that a dollar spent by government to help the poor actually provides half the actual aid as if a charity has spent that dollar. But since the ultimate question we are trying to answer is will the poor get as much aid if taxes are cut along with government aid programs, such considerations cannot be ignored. And your study does ignore them. But then, that study was not intending to answer the specific question we have been discussing, so I will not blame the study.
So with that in mind, what does your study say about the relationship between X and Y? Perhaps you can clarify something for me. In the Executive Summary in that study you cited, it says, among other things:
By examining various tax burdens and tax rates with rigorous economic analysis, this paper’s research findings show that a 1 percent increase in the personal income tax burden is associated with 0.35 percent decrease in charitable giving per dollar of state income.
Does the 1 percent mean 1% of the income tax or 1% of the income? That is, does it represent a jump in the effective tax rate from 20% to 21% or from 20% to 20.2%? Similarly, does the 0.35% mean a 0.35% drop in the total donations? Or is it 0.35% of the donation rate? I wish they had expressed the statistic in unambiguous terms. As it is, I find it difficult to answer this question: “If 1 billion dollars more are collected in taxes, how many fewer dollars will be donated to charity?”
Another thing to consider is non-linearity. The implication of the Executive Summary is that taxes and donations are linearly correlated. That is, whatever happens due to a 1 billion dollar tax cut, the effect will be twice as much if 2 billion dollars of taxes are cut. This is important because the study talks about small changes in taxes and resulting small changes in donations. How do we know if that relationship scales up? I suspect the effect flattens out for larger tax cuts. That is, once someone has reached the point where they no longer feel smothered by taxes, additional tax cuts probably have little additional effect. The greatest correlation is probably at the beginning, as a person transitions from feeling overwhelmed to feeling not overwhelmed. And since the amount of charitable giving we would need to replace all of government aid is huge, we would need this correlation to hold well beyond small changes.
Actually, I never did doubt that there was a cause and effect connection between tax rates and charitable donations. I just questioned whether that connection was big enough to do the job you are hoping it would do. Unfortunately, the study you cited does not answer that question. But thanks for citing an actual study, rather than just guessing (as I have done
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I agree.