ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

Effects of Household Religion on Tax Savings and Charitable Contributions in Response to the Change in Related Tax Benefits

  • BYUNG WOOK JUN University of Seoul

Asian Tax Journal Vol. 19 No. 1 (2018), pp. 33-78

Abstract

This study investigates the effects of household religions on the decision making of charitable contributions using the National Survey of Tax and Benefit data from the Korea Institute of Public Finance. Tax laws revision in 2014 to apply tax credits, instead of deductions, for charitable contributions significantly lowered public-purpose ones with religious ones not affected enough. This result implies that the decision making on religious ones to reflect relatively stonger personal faiths than public ones are made irregardless of tax savings. Doing this analysis by each religion, it was additionally found that, unlike households with other religions, the catholic households significantly increased religious ones, reducting much more public ones, to the tax laws revision in 2014, which implies noticeably higher relious allegiance of catholic households. This study also showed that charitable contibutions, were increased significantly, whether religious ones or not and whether above-the-limit ones or not, as tax savings effect grows bigger, which implies that basic economic considerations make important roles in the decision making. Specifically, the above-the-limit ones not to birng about additional tax savings effect are presumed to be increased reflecting that the decision making on those ones are not independent or those ones are not clearly recognized among taxpayers. However, households with any religion, which can be regarded to be more interested in tax savings effect, appeared quite a different behaviors, which implies the efforts not to breach the uppper limits of deductions or tax credits.

Keywords

  • Religion
  • Religious-purpose charitable contributions
  • Public-purpose charitable contributions
  • Above-the-limit charitable contributions
  • Tax savings effect
  • Tax credit

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Asian Tax Journal

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