How to fund nonprofits? [Job Market Paper] [Revise and Resubmit at Journal of Public Economics] [Draft]
Abract: Governments support nonprofits through direct grants and tax incentives for private donations, but the optimal mix of these tools remains unclear. I develop a model in which households donate to multiple causes and the government can use both instruments to support nonprofit funding. A key determinant of the optimal policy mix is tax discrimination, defined as the ability to vary tax incentives by cause. When tax discrimination is feasible, warm-glow giving makes private funding more efficient, reducing the need for grants. However, when tax discrimination is constrained, grants become essential to compensate for the rigidity of the tax system. In a calibrated example, the optimal government share of nonprofit funding rises from 0% to 60% as tax discrimination becomes more limited. When donations are leaky, delivering less than a dollar of value per dollar given, the importance of tax discrimination declines. In the extreme case of uniform leakage, Pareto efficiency can be achieved with grants and a linear tax credit, uniform across causes, similar to the systems currently implemented in Belgium, France, or New Zealand.
Taxing Profits or Dividends? A Case for the Corporate Income Tax? (with Etienne Lehmann)[Draft]
Abract: We study the optimal mix of corporate and dividend taxation in an economy with capitalists, workers and imperfect capital-labor substitution. When avoidance margins exist at the shareholder level, eliminating dividend taxation and shifting the burden to the corporate income tax is welfare-improving. In an infinite-horizon model, we show that the optimal policy prescribes zero dividend taxation in every period. This result is driven by efficiency concerns and does not depend on welfare weights. We show that the steady-state corporate income tax is strictly positive and can exceed its Laffer-maximizing level.
Scale-dependent and risky returns to savings : Consequences for optimal capital taxation.
Journal of Public Economic Theory, forthcoming, 2022. [Online Version]
Faut-il mettre au barème les dividendes? (avec Marie-Noëlle Lefebvre, Etienne Lehmann et Michael Sicsic)
Revue française d’économie, 2021, vol. 36, no 1, p. 57-98. [Article Publié]
Optimal Nonlinear Taxation of Charitable Giving
Wealth and Income Responses to Dividend Taxation : Evidence from France (with Marie-Noëlle Lefebvre). [Preliminary Draft ]