Taxes and Voluntary Contributions: Evidence from State Tax Form Check-off Programs

This paper analyzes taxpayer contributions to state check-off funds using four years of Kentucky household income tax data. An ordered probit shows that a taxpayer tends to give to more check-off funds as income increases and tax price of contribution decreases. A Heckman selection model shows that the Nature Fund and Child Fund are normal goods, with income elasticities of contribution of 0.20 and 0.14. With values of-0.58 and -0.29, the tax price elasticities of contribution are even greater. If refund amount is included, elasticities become smaller; the refund elasticities of contribution are 0.08 and 0.06, respectively.