Economic Analysis of the Charitable Contribution Deduction for Non-Itemizers

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The proposed deduction for charitable contributions for non-itemizers began in the 107^th
Congress with H.R. 7, passed by the House, which had eight new tax provisions designed to
benefit charities and charitable giving. This deduction, which was subject to a phased-in cap of
$100 ($200 for joint returns), was in the President’s initial tax proposal, although it was not
capped. In 2002, S. 1924, which included a temporary deduction with a $400/$800 cap, was
introduced in the Senate: the Senate Finance Committee adopted a version of S. 1924 with a floor ^th
and ceiling, also reported out as S. 476 in the 108 Congress and passed April 9, 2003. A similar ^th
non-itemizer deduction was in H.R. 7 in the 108 Congress, passed by the House on September ^th

17, 2003. S. 6 in the 109 Congress included the same deduction as did H.R. 3908 and S. 1780.

The President did not include the deduction in the budget for FY2006. The Senate-passed
reconciliation bill in 2005, S. 2020, included a temporary provision with a floor, paid for by
providing a floor for the itemized deduction. The Pension Protection Act (P.L. 109-208), adopted
in 2006, included some incentives for charitable contributions, but not a non-itemizers deduction.
The President’s advisory panel on tax reform also included a non-itemizers deduction with a floor
for all taxpayers equal to 1% of income. This plan is still under review at the Treasury
Department. This paper focuses on the economic effect of the deduction, assessing the incentive
such deductions would create for increased charitable giving. It does not attempt to estimate other
types of societal impacts.
Economic analysis suggests that the impact of the original proposed deduction on charitable
giving is likely to be relatively small, due to the proposed $100/$200 deduction cap. For
individuals and couples already contributing more than the cap, there is no additional incentive
for further giving. Nonetheless, the deduction would still generate a significant government
revenue loss. Effects are also reduced by estimates that project a limited response by taxpayers,
particularly lower income taxpayers, to this kind of charitable giving incentive. Analysis
suggested that even when the deduction is fully phased in , a dollar of revenue loss is likely to
increase charitable giving by three cents, even under relatively optimistic assumptions. The effect
would be only half as large if one netted out the percentage of contributions that go to provide ^th
sacramental services to church members. The higher caps in the 108 Congress proposals and in ^th^,
S. 6 in the 109 as well as the floor, is estimated to increase that amount to 18 cents. The
provisions in S. 2020 should induce giving in greater amounts than these proposals with little or
no revenue loss.
A capped charitable contribution deduction for non-itemizers would add complexity to the tax
system and to the simplified tax forms used by millions of taxpayers, since an additional line
would have to be added. Charitable deductions are also particularly complicated for record-
keeping purposes because there is no unified reporting system. Finally, because of the small
amounts in question and the absence of requirements for documentation for small gifts, tax
evasion may increase; there are likely to be deductions taken even when no contributions were
made.
This report will be updated to reflect legislative developments.

Description of Current Law and Changes.......................................................................................1
Charitable Deduction for Non-Itemizers...................................................................................1
IRA Rollover Provision.............................................................................................................2
Other Provisions........................................................................................................................2
Efficiency and Effectiveness...........................................................................................................3
The Price Elasticity...................................................................................................................4
Effect of the Caps in the Original Version of H.R. 7.................................................................6
Target of Induced Contributions................................................................................................8
Estimates of Induced Giving Per Dollar of Revenue Loss........................................................9
Effects of a Floor......................................................................................................................11
Equity Issues...................................................................................................................................11
Simplicity, Compliance, and Tax Administration..........................................................................12
Policy Options...............................................................................................................................12
Table 1. Caps on Charitable Contribution Deduction for Non-Itemizers in the 107^th
Congress Version H.R. 7..............................................................................................................2
Table 2. Use of Above the Line Deduction in 1986, at 2001 Income Levels..................................6
Table 3. Share of Revenue Cost Accruing to Taxpayers Subject to Marginal Effects.....................8
Table 4. Recipients of Individual giving by Income Class, 2001 Income Levels...........................8
Table 5. Estimated Cents of Charitable Giving Per Dollar of Revenue Loss, H.R. 7...................10
Appendix. Calculations of the Share of Contributions Subject to a Marginal Incentive...............14
Author Contact Information..........................................................................................................18

he Community Solutions Act of 2001 (H.R. 7) had eight new tax provisions designed to
benefit charities and charitable giving. According to the Joint Committee on Taxation, the
charitable tax benefit provisions were projected to cost $13.3 billion over 10 years; when T

fully phased in they would have cost $2.4 billion on an annual basis. The President proposed
three of these tax provisions in his first tax proposal, but these provisions were not included in the

2001 tax cut (P.L. 107-16). S. 1924, introduced in the Senate after discussion with the President,

and reported out in modified form on June 18, 2002, also provided a series of similar tax benefits.
It did not reach the floor, but a similar bill (S. 476) was passed by the Senate on April 9, 2003. A
version of H.R. 7 was reported by the Ways and Means Committee, and passed by the House on
September 27, 2003, with provisions similar to S. 476.
The Pension Protection Act (P.L. 109-208), adopted in 2006, included some incentives for
charitable contributions, but not a non-itemizers deduction. The President’s advisory panel on tax
reform also included a non-itemizers deduction with a floor for all taxpayers equal to 1% of
income. This plan is still under review at the Treasury Department.
This report summarizes the provisions affecting charitable contribution deductions of individuals,
and then analyzes the incentive such a deduction would create for increased charitable giving
beginning with the original proposal for a relatively low cap and then considering other
approaches including the current one. It does not attempt to estimate other types of societal
impacts. The non-itemizer’s charitable deduction was the single most important tax provision in ^th
the original version of H.R. 7. In S. 1924, S. 476, and the 108 Congress current version of H.R.
7, the non-itemizer provision was temporary and had a higher cap (and a floor). The provision
affecting rollovers from IRAs, which can also function as a deduction for non-itemizers, is also
discussed briefly.
The next section describes the proposed changes. The following sections discuss three basic
issues: how effective and efficient the proposed non-itemizer deduction might be in increasing
charitable contributions, how equitable the change is, and how the revision might affect tax
complexity, administration, and compliance.

Under current law a taxpayer can either itemize deductions (with the major deductions being
charitable contributions, excess medical expenses, mortgage interest, and state and local income
and property taxes) or choose the standard deduction. The latter is advantageous if that amount is
larger than total itemized deductions. The original version of H.R. 7 would have allowed someone
who takes the standard deduction to deduct charitable deductions in addition, but with caps as
shown in Table 1. (The deduction is taken from adjusted gross income, and thus would not affect
that measure.) S. 1924 initially would have imposed a cap of $400 ($800 for joint returns). The
version passed on April 9, 2003, would have, like the President’s proposal, provided a floor and
cap of $250/$500 ($500/$1000 for joint returns); a similar provision was adopted on September 9,
2003 by the Ways and Means Committee. The President’s advisory panel would expand the
deduction to all taxpayers and apply a floor of 1% of income.

Table 1. Caps on Charitable Contribution Deduction for Non-Itemizers in the 107^th
Congress Version H.R. 7
^Year^{Cap For Single Returns}^{Cap f}^{or J}^{oint Returns}
²⁰⁰^2-2⁰⁰^{3 $25}^$50
²⁰⁰^4-2⁰⁰^{6 $50}^$10⁰
²⁰⁰^7-2⁰⁰^{9 $75}^$15
²⁰¹^{0 a}^{nd after}^$10⁰^$20⁰
A deduction for non-itemizers was formerly available in the tax law, enacted as part of the
Economic Recovery Tax Act of 1981 (P.L. 97-34). The deduction was temporary for the years
1981-1986, and initially restricted to dollar ceilings and partial deductions (e.g. deductions for
25% and then 50% of contributions). However, 1986 was a year with no dollar limits and full
deductions. The Tax Reform Act of 1986 (P.L. 99-514) was a measure aimed at lowering rates
and broadening the tax base; since it made no provision for extending the charitable deduction,
that provision ended after 1986. However, data from 1986 provide a basis for estimating some of
the economic effects of the current proposal.
The second largest provision in the original version of H.R. 7 (and retained in other versions) is
one allowing tax free distributions by individuals aged 70 and1/2 and over from individual
retirement accounts to charitable organizations. While this treatment may appear no different
from simply including the amounts in adjusted gross income and then deducting them as itemized
deductions, it can provide several types of benefits even to those who itemize. Apparently an
important motivation is to reduce adjusted gross income which can trigger a variety of phase-outs
and phase-ins, including the phase-in of taxation of Social Security benefits. (Another potentially
important phase-out effect, that for itemized deductions, is now scheduled to be eliminated.)
There are also some income limits on charitable contributions.
However, unlike the case in the President’s proposal, this provision can also benefit those who
take the standard deduction by allowing exclusions that would not be otherwise allowed. In
effect, a return with the standard deduction would have no cap on charitable deductions up to the
limit of aggregate IRA amounts, since the taxpayer could simply channel contributions through an
IRA. (This effect did not matter in the President’s proposal which had no cap).
This provision was adopted as part of the Pension Protection Act (P.L. 109-280), with rollovers
limited to $100,000 per year.
The remaining provisions include a phased in increase in the cap on corporate charitable
contributions; a change in the treatment of contributed property by firms, modifications of excise
taxes on net investment income (and one previous version in the House included a provision
restricting the counting of some administrative costs as part of a foundation’s minimum
distribution requirement), changes in the treatment of unrelated business income, changes in the
treatment of self constructed property, and modification of basis for certain appreciated assets.
The increase in the corporate charitable deduction limit was also included in the President’s

proposal; this provision and the excise tax revisions are the largest in revenue terms of the ¹
remaining provisions. The Senate-passed bill, however, excluded these provisions but contained
other ones. Some other provisions affecting charitable donations were also included in the ²
Pension Protection Act.

The first question that one might consider is whether the deduction for non-itemizers is effective
and efficient in achieving its goal. The charitable deduction provision is combined with other
legislative initiatives, including charitable choice provisions that are designed to liberalize rules
governing the administration of public funds by religious organizations. The stated purpose of the
tax revision was to encourage giving to charitable organizations: “to provide funds to charitable
organizations, many of which will perform activities that otherwise would have to be performed ³
by the Federal Government.”
Economic theory also recognizes an efficiency rationale for subsidies to charitable giving. When
individuals give to charity, they do not take into account the benefits their contribution provides
to others and therefore charitable giving is under supplied in a market economy. Indeed, other
potential donors in society can receive the benefits from the charitable activities of others without
contributing. This free-rider problem is, in fact, one of the justifications for government activities
that use mandated contributions (taxes) to provide a variety of services. Some activities (such as
national defense) would probably be impossible to provide privately. Most of the support of the
poor is also undertaken by government. Other activities that may have broad benefits to society
(e.g. research and development, art, education) are provided both publicly and privately.
There are advantages and disadvantages in using direct funding versus encouraging private
charitable donations. For example, government provision may more generally reflect the
collective preferences of society, but private provision may provide added diversity.
The under supply of charitable activities is greater in some circumstances than in others. One
important factor is the size of the contributing group. In general, the larger the pool of
contributors or potential contributors, the greater the free-rider problem. It is also more difficult to
obtain a better market outcome if the benefits of the activity are not excludable. For example,
contributions that finance health research benefit all members of society; for that reason
government is heavily involved in providing funds for such research and in providing a legal
framework (e.g. patent laws) that encourage the profit-making sector to invest. Art museums,
however, have the option of charging admission to finance their services so that these institutions
would still exist (perhaps in smaller numbers) in the absence of both charitable donations and
government support.

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Another of the problems with stimulating charitable activities through private giving is that it is
not always easy to separate pure charitable giving and giving in which the donor receives a direct
benefit. A contributor to the opera, for example, who receives a seating preference, is receiving a
benefit. Contributors to institutions of higher education may find it more likely that their children
are admitted to prestigious schools. And, one of the more obvious examples of small groups that
receive benefits are contributions to churches, where contributions are partly used to provide
services to members. This provision of sacramental and similar services is particularly important
in evaluating the deduction for non-itemizers because of the very large fraction of contributions
that go to religious organizations.
There is also some leakage in the tax system in that individuals will claim deductions for
expenditures they did not incur. This problem may be particularly likely to arise with small cash
donations since there is no requirement that small donations be substantiated and it is not efficient
for the tax authorities to make efforts to enforce compliance associated with small dollar
amounts.
Another issue is whether a dollar spent stimulating private giving will result in contributions
(regardless of their use) that are greater than a dollar or smaller than a dollar. If the induced
contribution is larger, private charitable tax incentives are more efficient than direct spending,
assuming the objectives of private and public spending are equally desirable. The stimulative
effect of a tax subsidy is measured by the price elasticity. As a rule of thumb, without considering
other factors (such as the whether the contributions actually go to a charitable purpose and the
effects of caps), a dollar of revenue cost will result in more than a dollar of giving if the price
elasticity is above one in absolute value. (All further references to price elasticities will refer to
absolute values, without negative signs.)
Finally, an important issue with a capped deduction is what portion of the revenue loss is
associated with individuals whose deductions, in the absence of the subsidy, are less than the cap.
If individuals are already giving more than the cap, there is no economic incentive for further
giving, since further giving will not affect tax liability. However, the government still incurs a
revenue loss.
Therefore, the amount of induced giving per dollar of revenue cost for the non-itemizer capped
deduction is the product of three factors: the absolute value of the price elasticity, the share of the
cost going to individuals not subject to the cap, and the share of the induced contributions going
to desired charitable activities. The following subsections explore each of these in turn.
Research on the price elasticity of charitable contributions had long suggested that, other things
equal, charitable contributions deductions might be efficient since elasticities averaged above
one. However, these studies were criticized because they did not control for transitory timing
effects. High income individuals would choose to make contributions when their tax rates and
income were temporarily high, but this effect would not be a permanent response. Estimates
correcting for this effect found elasticities below one. A recent study of the effect of fundamental

tax reform used, as a base case, an elasticity of 0.5, corrected for timing effects, but also ⁴
considered the older elasticity of 1.3 reflecting general findings of earlier studies.
A recent study (Duquette, 1999) of non-itemizer contributions also suggests that elasticities will ⁵
be below one in absolute value. This study examined the non-itemizer deductions allowed in
1985 and 1986 (when ceilings were not present), and also estimated price elasticities for
itemizers. Note that this study could not correct for transitory effects, including the temporary
nature of the deduction for non-itemizers which would have encouraged individuals to shift
deductions, especially to 1986, particularly those at higher income levels. This study found
elasticities, for 1985 and 1986, of 1 and 1.24 for itemizers, but elasticities of 0.8 and 0.6 for non-
itemizers. (Note that the estimate for non-itemizers in 1985, while statistically significant, was not
measured very precisely; the estimate for 1986, while measured somewhat more precisely, may
be overstated because individuals would have an incentive to concentrate their contributions in
that year.)
These findings of lower elasticities for non-itemizers are also consistent with evidence that
suggests that price elasticities are not constant across income levels, but are lower at lower levels.
Examining itemized returns that do not suffer as much from transitory effects, Duquette finds
price elasticities for the $1 to $40,000 income class to be 0.08 in 1985 and 0.25 in 1986, with
neither estimate statistically different from zero. Elasticities rise as income increases (although
some of that increase may reflect the greater importance of transitory effects at higher income
levels).
As shown in Table 2, where the 1986 data are reported by income class (but restated in 2001
income levels) non-itemizer deductions are concentrated in lower income levels, simply because
it is in the lower income levels that the standard deduction is normally taken. Based on
Duquette’s elasticities by income level, an average elasticity weighted by the number of
contributors in each class suggests an elasticity of 0.10 based on 1985 data and 0.29 based on
1986 data. (These estimates are, however, highly imprecise.) The effects of caps, which tend to
concentrate the marginal benefit even more among lower income levels, would slightly decrease
these estimates.
On the whole, therefore, the evidence suggests price elasticities that are considerably lower than
one, and perhaps not very different from zero. In the analysis below, we use the estimate of 0.5,
which reflects a typical level from the literature corrected for transitory effects, is somewhat
below Duquette’s direct estimates (which do not correct for transitory effects) and somewhat
above the income weighted estimates. We also discuss the effects of alternative choices.

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A second issue is the effect of the caps. In order to estimate this effect, we combine the data in
Table 2, which reports on average contributions by income class with survey data that provides a ⁶
distribution of non-itemizer contributors by size of contribution. This survey data indicated that
29.3% of non-itemizing households contributed less than $100 and 44.6% contributed less than
$200.
Table 2. Use of Above the Line Deduction in 1986, at 2001 Income Levels
^Non-^{% of}^{% of}
^{Share of}^Average^Amou^nt^Itemizers^with^Returns^Tax^payers^{% of}^Tax
^Income^Total^Claimed^Contribution^With^{with no}^payers
^Class^Returns^{by Non-}^{As a %}^of^Above^Above^Who
^(%)^Itemizers^{all Non}^{the Line}^{the Line}^Itemize
^Itemizers^Deduction^Deduction
^Under^{16 $41}²¹⁷¹⁶⁷⁹⁵
^$12,0⁰⁰
^$12,0^00-^{16 808}⁴²³⁸⁵²¹⁰
^24,0⁰⁰
^$24,0^00-^{13 100}¹⁵⁵⁴⁵^{37 18}
^$36,0⁰⁰
^$36,0^00-^{11 124}¹⁶⁰⁴³^{29 29}
^$48,0⁰⁰
^$48,0^00-^{9 132}²⁶⁴³⁶²⁰⁴³
^$60,0⁰⁰
^$60,0^00-^{7 169}²⁶⁶²⁷¹⁴⁵⁹
^$72,0⁰⁰
^$72,0^00-^{11 169}⁹⁷²¹⁸⁷⁷⁵
^$96,0⁰⁰
^$96,0^00-^{7 223}⁰⁷⁷¹⁰^{3 88}
^$12^0,00⁰
^$12^0,00^0-^{6 336}⁵⁷⁸⁵^1.3⁹⁴
^$18^0,00⁰
^$18^0,00^{0 -}^{1.5 614}⁰⁸⁶³^{0.6 97}
^$24^0,00⁰
^$24^0,00⁰^{1.5 821}²⁵⁹¹^{0.8 98}
^{and over}
^Source:^{CRS calculations based}^{on data from Int}^{ernal Reve}^{nue Se}^rvice^{Statistics of Inco}^{me, Individual Income Tax}
^{Returns 1986.}^Dol^{lar amounts are}^{restated in 2}⁰⁰¹^{income levels.}
Although these numbers suggest a substantial fraction of non-itemizers might affected by the cap,
these numbers are much too large to provide a guide to the projected efficiency of H.R. 7. Indeed,
we estimate that the share of tax cuts accruing to those under the cap is only 3% initially and only

6% when the provision is fully phased in.

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A more detailed explanation of the corrections that should be made in these data is provided in
the Appendix. However, some simple approximations will explain why this share is relatively
small. To begin with, we need to estimate an aggregate that reflects the shares of joint versus
single returns; since only 20% of non-itemizer returns are joint, a number of about 32% is
appropriate. (Our actual estimates are slightly different because shares are adjusted by income
class.)
But out of the class with contributions below the ceiling, the average deduction will also be below
the ceiling, while for those above the ceiling the average deduction will also be the ceiling
amount. If, say, the average were only half the cap, the percentage of deductions below the ceiling
would fall to 19% (0.32 X 0.5)/(0.32X0.5 +0.68). However, this number is also too large because
the data indicate the cumulative share of the population under a ceiling do not rise proportionally
with ceiling increases; that is, the function is not a linear one. For that reason, the average
contribution in the bottom class tends to be less than half the ceiling: a functional form that fits
the data quite well suggests that the average will be about 32% of the ceiling. This correction
would lead to about 13% of the cost associated with the group under the ceiling (0.32 X

0.32)/(0.32X0.32 +0.68).

The tax revenue shares would be further lowered because small contributors are concentrated in
low tax rate brackets. Calculations in the Appendix suggest that the average tax rate in this class
is only 70% of the average across all taxpayers, causing the share to fall to 9.5% of the total (0.32
X 0.32X0.7)/(0.32X0.32X0.7+0.68).
Two other factors tend to lower the share, although they interact with the correction described
above in ways that cause only a small additional reduction. First, the survey data cover the entire
population while tax benefits go only to the taxpaying population. About 20% of returns have no
tax liability before credits. Since low levels of donations are associated with lower levels of
income, the share of the taxpaying population with small donations should be considerably
smaller than the share of the total population. Adjustments for these effects suggest that about

24% of the taxpaying population would fall below the caps.

Finally the caps were phased in and began at $25/$50 rather than $100/$200. Moreover, even as
caps increase in nominal value, they are also declining in value relative to income, so the shares
will fall below 10%. An adjustment is also made for these effects, which vary by year, but even in
the year that benefits are fully phased in, the caps are cut approximately in half. (Further details
of the methodology used to make these adjustments are provided in Appendix.)
Table 3 presents the estimated share of revenue loss that falls under the cap as a result of these
calculations. After 2011 the share would continue to decline as nominal values fall relative to
incomes.
For the $400/$800 ceiling, the share of revenue going to individuals with a marginal incentive ⁷
would be higher, but is still at 24%.

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Table 3. Share of Revenue Cost Accruing to Taxpayers Subject to Marginal Effects
^Year^{Nominal Dollar Ceiling:}^{(Single/Joint)}^{Estimated Share (%)}
²⁰⁰^{2 $25/}⁵⁰^2.8
²⁰⁰^{3 25/5}⁰^2.7
²⁰⁰^{4 50/1}⁰⁰^4.7
²⁰⁰^{5 50/1}⁰⁰^4.6
²⁰⁰^{6 50/1}⁰⁰^4.4
²⁰⁰^{7 75/1}⁵⁰^5.7
²⁰⁰^{8 75/1}⁵⁰^5.5
²⁰⁰^{9 75/1}⁵⁰^5.3
²⁰¹^{0 100/}²⁰⁰^6.3
²⁰¹^{1 100/}²⁰^6.0
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A final issue that would affect the target effectiveness of the non-itemizers deduction is what
types of contributions are induced. This issue is particularly important because of the amount of
giving to religious organizations. To the extent that those contributions provide for member
benefits, they may be less likely to efficiently address the market failures in charitable
contributions identified by economic theory or the objectives stated directly in the legislation (to
provide for private provision of services that might otherwise be provided by the government).
The most important recipient of all charitable giving is religion, which accounted for 36.5% of ⁸
the total $203.45 billion of giving in 2000. It is almost three times as large as the next largest
recipient area (education) which accounts for 13.8%. The remaining categories (health, human
services, arts, culture, public/society, environment and international affairs) account for less than
10% each. Religious giving accounts for an even larger share, 43.4%, of giving, excluding
foundations. (Foundations account for 12% of giving, individuals for 75%, bequests for 7.8% and
corporate giving for 5.3%.) However, giving to religious organizations is even more pronounced
among individuals at lower and moderate incomes, as shown in Table 4, which reproduces data
from 1992, restated at 2001 levels of income.
Table 4. Recipients of Individual giving by Income Class, 2001 Income Levels
^{Income Class}^{Share to Religion}^{Share to Higher}^Educ^ation^{Share to Other}
^$8,00^0-1^6,00^{0 72.4}^1.4^26.2
^$16,0^00-^24,0^{00 76.2}^0.8^23.0
^$24,0^00-$^33,⁰⁰^{0 76.4}^0.7^22.9

⁸^Gⁱ^vⁱ^ng^U^S^A²⁰⁰¹^{. A}^m^e^r^ic^aⁿ^A^s^s^o^cⁱ^a^tion^of^Fun^d^R^a^isⁱⁿ^g^C^o^uⁿ^s^e^l.

^{Income Class}^{Share to Religion}^{Share to Higher}^Educ^ation^{Share to Other}
^$33,0^00-$^41,⁰⁰^{0 75.6}^0.7^23.7
^$41,0^00-$^50,⁰⁰^{0 74.3}^0.8^24.9
^$50,0^00-$^66,⁰⁰^{0 72.1}^0.9^27.0
^$66,0^00-$^83,⁰⁰^{0 68.5}^1.1^30.3
^$83,0^00-$¹²^4,0^{00 62.4}^1.5^36.1
^$12^4,00^0-$1^65,⁰⁰^{0 52.7}^2.3^45.1
^$16^5,00^{0 -$}³³^0,00⁰^37.8^4.0^58.2
^$33^0,00^{0- 8}^23,0⁰⁰^15.2^11.2^73.6
^$82^3,00^0-1,0^00,0^{00 6.3}^23.1^70.8
^$1,65^1,00^{0 a}^{nd over}^6.1^20.5^73.3
^Source:^{Charles Clotfelter and}^{Richard L. Schmalbeck, “The Im}^p^{act of Fundame}^{ntal Tax Reform}^{on Nonp}^rofit
^{Organizations,” In}^Econo^{mic Effects of Fundamental Tax Reform}^{, ed.}^Henry^{J. Aaron and William G. Gale}
^{(Washington, D.C.}^{, The Brookin}^{gs Institute,}¹⁹^96).
When the shares in Table 4 are matched with the data in Table 2, the results indicate that 73% of
contributions for non-itemizers in general, and 74% for non-itemizers who fall below the cap, are
made to religious organizations.
Of course, religious organizations engage in activities that provide benefits beyond the local
congregation and even outside of strictly religious functions. A study of the disposition of these
funds, however, indicated that about 70% of the receipts of religious organizations go to provide ⁹
sacramental services and similar services for members. Thus, assuming that those under the caps
have similar characteristics in the choice of giving to those over the caps, one could make a case
for excluding 52% of induced contributions (0.7 times 0.74) in measuring the efficiency of the
charitable deduction provision.
In this section we combine the three estimating parameters to estimate the induced giving in cents
per dollar of revenue cost. These estimates are provided in Table 5, and they indicate that
initially, excluding religious member services, each dollar of revenue lost will result in one cent
of induced contributions. This amount will gradually rise to two cents before beginning to fall. If
all giving is included, the induced amount begins at slightly over two cents, gradually rising to
almost four cents.
The estimated effects of the $400/$800 caps in the original versions of S. 1924 would be
somewhat larger, 12 cents per dollar of revenue (0.5 X 0.24), with half that amount going to
religious services, for an induced giving outside of religious services of 6 cents per dollar of
revenue loss. The combination of floors and caps in the version of S. 1924 reported and passed by

⁹^S^{ee Jeff}^E^.^Bi^d^d^l^e,^“Relⁱ^gⁱ^o^u^s^Organⁱ^zatⁱ^oⁿ^s^{” In}^W^h^{o Be}^ne^fits^fro^m^the^No^npro^fit^Se^c^t^or^,^edⁱ^t^ed^b^y^Ch^arl^e^{s T}^.
^Cl^o^t^f^e^l^t^e^r,^Chⁱ^cago^,^Unⁱ^v^ersi^t^y^o^f^Chⁱ^cago^P^r^ess,¹⁹⁹²^.^A^cco^rding^{to t}^h^e^a^r^tic^le^{, 7}⁰^%^of^th^{ese t}^r^an^sf^{ers go}^t^o^p^r^o^vⁱ^d^e
^f^o^{r sacra}^m^en^{tal serv}^ice^s^an^d^simⁱ^l^a^{r serv}^ice^s^f^o^{r th}^{e me}^m^b^ers.

the Senate as S. 476 and reported by the Ways and Means Committee this Congress as H.R. 7 (a
cap of $1000 and floor of $500 with half the amount for single returns) would result in about 18 ^th
cents per dollar. These caps and floors are also contained in S. 6 in the 109 Congress.
By any of the measures, very little induced giving occurs as a result of the capped itemizer
deduction in H.R. 7 or even in S. 1924. The most important limiting factor is the cap on
deductions which causes most of the revenue loss to accrue as a benefit (or windfall) to
individuals who are already giving in excess of the cap. However, the effectiveness is also limited
by the relatively low price elasticity (which alone would cause only 50 cents of induced giving
per dollar of revenue loss, even without the caps or exclusion of religious member services). A
deduction with no caps would result in only 24 cents of induced giving out side of religious
member services. Thus, all three factors act to limit the effectiveness of the deduction for non-
itemizers.
Table 5. Estimated Cents of Charitable Giving Per Dollar of Revenue Loss, H.R. 7
^{Excluding Expenditures}^{Including Expenditures}
^Year^{on Religious Member}^{on Religious Member}
^Services^Services
²⁰⁰^{2 0.7}^1.4
²⁰⁰^{3 0.6}^1.3
²⁰⁰^{4 1.1}^2.4
²⁰⁰^{5 1.1}^2.3
²⁰⁰^{6 1.0}^2.2
²⁰⁰^{7 1.7}^2.9
²⁰⁰^{8 1.4}^2.8
²⁰⁰^{9 1.3}^2.7
²⁰¹^{0 1.5}^3.1
²⁰¹^{1 1.5}^3.0
^Source:^{CRS calculations. The third column is 0.5 (t}^{he p}^{rice elast}^{icity) times the share in}^{the t}^hird^{column of}
^{Table 3}^{. The second column is 0}^{.48 times column}^three.
These numbers are, of course, sensitive to the estimates of the share affected and the estimates of
price elasticity and exclusion of member religious services. Evidence suggests, however, that the
price elasticity, if anything, is probably smaller. Using Duquette’s elasticity estimate weighted by
income would result in a weighted elasticity of 0.29 without the caps and 0.26 with the caps, even
using the higher 1986 estimates. With the lower 1985 estimates, the elasticity would be 0.12
without a cap and 0.10 with a cap. Estimating the share attributable to caps is also subject to a
number of potential uncertainties because of limitations of the data.
It is possible that small contributors are less likely to be making regular contributions to churches
and the estimates in column two may be somewhat understated. At the same time the estimates do
not take into the account the possibility that a lot of small deductions may simply be claimed
without making a contribution, given the fact that such small deductions are likely to be
unchallenged by the tax authorities.

Note that the provision allowing IRA rollovers will have a greater impact per dollar of cost than
the deduction for non-itemizers, because the effective caps are likely to be larger.
A capped deduction is less costly than an uncapped deduction but also less efficient. It is possible
to increase the efficiency level by use of a floor and the Senate adopted a proposal that has a cap ¹⁰
as well as a floor. As the Appendix shows, this same data can be used to estimate a floor; in the
case of a $500 ($1000 for joint returns) floor, we estimate that each dollar of revenue loss will
induce 64 cents of giving (and 32 cents if religious services were excluded). The floor increases
the power of the effect (which would otherwise be 50 cents total on the dollar with a deduction
with neither cap nor floor), and an important constraint is the elasticity. A floor, however, tends to
shift the distributional effect to higher income individuals compared to a ceiling.
One approach that is likely to be even more efficient and which does not shift the distribution as
much is to have a floor as a percentage of income. It is more efficient because the floor can be
moved up to reflect the higher giving levels of higher income individuals. While our data do not
permit the full projection of large floors (and thus effects can be calculated only at lower incomes,
initial results suggest that this approach would be considerably more effective per dollar of
revenue. For the $12,000 to $24,000 income class, a floor that was 2% of income was estimated
to induce 81 cents of contributions per dollar. In the $24,000 to $36,000 class, each dollar of loss
is estimated to induce $1.04 of contributions. In the $33,000 to $48,000 income level, each dollar
of loss is estimated to induce $1.31 of contributions. These effects would, of course, vary with the
percentage of income, falling as the percentage falls and rising as it rises, and about half would go ¹¹
to religious services.

Equity issues are probably not the principal issues associated with a charitable deduction for non-
itemizers. The tax cut benefits individuals in the lower and moderate income classes relative to
many types of tax cuts, but the same effects could be accomplished with an increase in the
standard deduction.
It may be argued that individuals should be able to deduct charitable contributions separately
because they do not benefit from them. However, economic theory does not provide a particular
justification for deducting charitable transfers on equity grounds since individuals freely make
such contributions and derive some benefit from them (even if the benefit is only a good feeling).
Moreover, individuals who take the standard deduction generally elect to take it because it is
larger than their itemized deductions, including charitable contributions.
Another claim that might be made is that charitable giving directly benefits the poor as recipients
of funds. Of course, as indicated above, very little of the revenue loss translates into additional

¹⁰^T^h^{e effect}^o^f^a^f^l^o^o^rⁱ^s^al^so^estⁱ^m^at^edⁱⁿ^“E^xt^en^diⁿ^g^t^h^{e Ch}^ari^t^a^b^l^e^Ded^u^c^tⁱ^oⁿ^t^o^Nonⁱ^t^e^mⁱ^zers:^P^o^lⁱ^c^y^Is^su^{es an}^d
^O^p^tio^ns^,”^by^J^o^s^e^{ph C}^o^r^d^e^s^{, J}^o^hn^O^’^H^a^r^e^{, a}^{nd E}^u^g^e^ne^Ste^u^e^r^le^{, I}ⁿ^C^h^a^r^ting^Cⁱ^v^{il S}^o^cⁱ^e^t^y^,^N^o^{. &}^,^M^a^y²⁰⁰⁰^{, t}^h^e
^U^r^ba^{n I}ⁿ^s^tⁱ^t^ute^.
¹¹^T^h^e^CBO^s^t^udy^,^Effe^c^t^s^{of All}^o^wⁱ^{ng N}^oni^te^mⁱ^z^e^r^s^{to D}^e^duc^{t C}^har^it^able^C^ontrⁱ^but^io^ns^{, o}^p^c^it.^{, f}ⁱ^nds^m^o^s^t^pr^opos^a^l^s
^w^{ith a}^f^l^oor^to^ha^v^e^sm^a^{ll ef}^f^e^c^t^s^{in e}^x^c^e^s^s^of^a^de^duc^tion^w^ithout^a^f^l^oor^{, h}^o^w^e^v^e^r^.

giving with caps. In any case, only a small fraction of money that goes to charity is focused on
poor people. For example, only about 6% of giving to religious organizations is estimated to go to
benefit poor individuals. And while the share benefitting the poor is somewhat higher in some
other categories, we estimate that no more than 10% of all charitable giving directly benefits the ¹²
poor. Moreover, very little of this amount is in the form of cash transfers.

A charitable deduction for non-itemizers adds complexity to the tax system. Indeed, one of the
standard deduction’s major purposes has been to reduce the complications of tax filing by
allowing a fixed sum for most individuals as a substitute for itemized deductions. Allowing an
additional deduction for charitable contributions would add an additional complication, in
particular since charitable deductions may occur in small amounts and require more record-
keeping than many other kinds of deductions. Most itemized deductions (taxes, mortgage interest)
are reported directly to taxpayers, but records of small charitable contributions must be kept by
taxpayers themselves. Individuals who wish to claim the deduction would have to use more
complicated forms and all individuals using those forms would have an additional line to read. An
additional deduction also makes it more difficult to consider moving some day to a simplified,
return-free income tax filing system.
In addition, because of the small sums involved with a cap and the lack of a requirement for
record-keeping for these small sums, the allowance of an deduction for charitable contributions
may induce more than average amounts of tax evasion. Many individuals will probably figure
they can safely report a small amount of fictitious contributions without any consequences,
although there were many individuals who made no contributions at all when the non-itemizers
deduction was allowed in the early 1980s.

The most important revision that might be considered in the non-itemizer deduction is to
eliminate the caps. Of course, one of the constraints on tax cuts is the shortage of revenue.
However, it would be possible to modify the deduction to make more of the contributions subject
to marginal effects even while limiting the revenue cost. One approach would be to raise or even
eliminate the ceilings and provide only a partial deduction. Partial deductions were allowed
during the 1981-1985 period.
An approach that would have an even more pronounced effect on targeting the marginal
contribution would be to institute a floor, rather than a ceiling, as is the case for medical
deductions. Such a floor increased the bang for the buck somewhat for the version of S. 1924
reported by the Senate Finance Committee, but its effect was still constrained by the cap. A flat
dollar floor would simplify administration and reduce false claims of deductions. A floor based on
income would be most effective, although more complicated to compute. A floor might also direct
even more of the benefits to religious activities that provide direct services to the contributors.

¹²^T^h^{ese est}ⁱ^m^a^t^e^{s are b}^a^sed^oⁿ^t^h^e^artⁱ^c^l^e^{s i}ⁿ^W^ho^Be^ne^fits^fr^om^the^Nonpr^ofit^Se^c^t^or^{, e}^d^ite^d^by^Cha^r^le^{s T}^.^Clotf^e^lte^r
⁽^C^hic^a^g^{o: U}ⁿ^iv^e^r^s^ity^of^C^h^ic^ag^{o P}^r^e^s^s^,¹⁹⁹²⁾^.^Fur^t^he^r^de^ta^ils^a^r^e^a^v^a^ila^ble^f^r^o^m^the^a^u^thor^.

The third option is to use the revenue that would have been directed at the tax cut to fund
spending programs aimed at the same objective, either through a direct government program or a
grant that might be administered by a private entity.

To estimate the share of dollars going to individuals who will have a marginal incentive requires
the combining of two sets of data: the 1986 data on the number of returns that claimed the non-
itemized deductions for charitable contributions, and recent data by the Independent Sector
showing that 29.3% of individuals made contributions that amounted to less than $100 and 44.6%
of individuals made contributions that amounted to less than $200. These data are not distributed
by income.
We cannot directly use these latter numbers for several reasons. First, these survey data on
distribution of contributions by size of contribution cover individuals who would have no tax
liability, and thus would not have a benefit from the deduction. Since there is a correlation
between small contribution size, small income and lack of tax liability, the percentage would be
smaller. Secondly, the dollar limits depend on filing status (joint or single) so that the numbers
must be weighted to reflect ceilings averaged over filing status.
To allocate these amounts over incomes, we used the average contribution in each income class
from Table 1 as a guide to the differential share of individuals in each class below the cap, by
measuring the share that would have fallen below the contribution limit based on a uniform
distribution of contributions. This approach produces a total number that is too small (because
there are likely to be some individuals in each class with very large contributions that affect the
average in a way that a uniform distribution would not). The formula for this ratio is the dollar
cap divided by twice the average contribution. This method produces shares that begin at 24% in
the lowest class and decline to 12% in the next bracket, 10% in the next and so forth, with an
average of 10.4% for all of the income classes.
The $200 and $100 amounts were computed separately and then weighted. In the case of the $200
amount, we begin with an overall average of 44.6%. However, some of that amount reflects
individuals who might have not claimed a deduction because of lack of tax liability. We made an
adjustment only in the lowest bracket by assuming that the differential between the share
claiming the deduction in that bracket and the next bracket was part of the reported share. This
amount of 6.3 % reduces the overall average for taxable returns under $200 to 38.3%. A similar
procedure reduces the share for the $100 and over contribution class to 23.0%. This adjustment is
imperfect, since it assumes all of that amount is due to contributors (overstating the adjustment)
but makes no adjustment for the next bracket, where some returns might not be taxable as well
(understating the adjustment).
To obtain the totals, each ratio was multiplied by the share derived from the uniform distribution
calculation, so that for the $200 category the share in the lowest class was 90% (38.3/10.4 times

0.24), the next class was 46% and so forth. A similar procedure was calculated for the $100 class.

In calculating the totals, however, an exclusion of returns expected to have no tax liability under
current tax law was made. For the joint return ($200) number, the first bracket was excluded
entirely. For the single or head of household return ($100) number, two thirds of the first bracket
was excluded based on the exempt levels of singles and heads of household, and the share of
returns that are heads of household in that category. The resulting effect of excluding this total
was to reduce the under $200 share from 38.3% to 36.9% and the under $100 share from 23% to

22.5%.

Each income class was then weighted according to the share of joint returns filed in that class
(based on 1997 data inflated to 2001 income levels). This procedure yielded a total of 24.1% of
returns with contributions under the cap.
This 24.1% number is, however, too large to use in estimating contributions induced per dollar of
revenue loss. First, those over the cap have a full $200/100 deduction, while those under the cap
have only a partial deductions. Thus, it is necessary to estimate the average size of contributions
for those below the cap. Secondly, the returns above the cap will have higher marginal tax rates
than those under the cap, because the share under the cap falls as income rises. To correct for this
effect, we weighted the tax rates for the cap and the tax rates for all returns, and found those with
a cap had tax rates approximately 70% of those over the cap. Finally, the caps begin at a smaller
level and are phased in nominal terms. In 2002 and 2003, the ceiling is only a quarter of the size
of the long run amounts: $25 and $50, rather than $100 and $200. And, the dollar amounts do not
rise with income; even the data on the shares with $200 and $100 ceilings from 1999 must be
corrected for growth over that time. That is, to maintain the shares of individuals under the caps,
the $100 and $200 amounts must have been increased with income growth. Adjusting by growth
rates that have already occurred in output and by the projections of the Congressional Budget
Office, a $100 deduction in 1999 must have growth by 76% to maintain its relative value in 2010,
which is the same as saying, for purposes of applying the data from 1999, that the 2010 deduction
is only 54% of its value in 1999.
In adjusting the shares for these lower real amounts, however, another problem is projecting from
the data (44.6% giving less than $200 and 29.3% giving less than $100). This function is not
linear; that is, if we want to examine the effect of a deduction 25% as big, we cannot simply use a
share a quarter as large.
The data suggest some sort of exponential function relating cumulative shares of the population to
dollar amounts. We considered two functional forms. The first is a function derived from an
exponential probability distribution of the form:
(1) ()1expSxp=−−
where S is the cumulative share of the population falling below the dollar value of x, with x
ranging from zero to infinity.
The second functional form was:
(2) ^pSAx=
To project these relationships, we used all of the observations of shares up to $1000, assumed an
exponential function and fitted the curve. Both curves performed well statistically; however, the
first functional form did not match shares very well at the lower end of the distribution. The
second function matched these shares very closely, but had the disadvantage that probabilities do
not sum to one. We chose the function that fit most closely at the low end of the scale, and which ¹³
yielded an exponential curve with a power of 0.4476. In general, a limit 25% as large would

¹³^For^t^h^e^fⁱ^r^s^{t s}^e^v^e^{n inc}^r^e^m^eⁿ^ts^of^$10^0,^the^s^h^a^r^e^s^a^r^e^0.²⁹^3,^0.¹⁵^3,^0.1²²^,⁰^.⁰^86,^0.⁰⁶^6,^0.⁰⁴^{9, a}ⁿ^d⁰^.⁰²^{5. T}^h^e^ne^x^t
^$³⁰⁰^,^f^r^o^m^$⁷⁰⁰^t^o^$¹⁰⁰⁰^,^acco^un^t^f^o^{r 0}^.⁰⁵⁷^.^Despⁱ^t^{e t}^h^{e sm}^al^lⁿ^u^m^b^{er o}^f^o^b^s^ervatⁱ^oⁿ^s^,^t^h^{e con}^s^t^a^nt^t^e^rm^an^d
^e^x^pone^{nt w}^e^r^e^s^t^a^tis^tic^a^l^l^y^sⁱ^gⁿ^ifⁱ^c^aⁿ^{t a}^nd^pr^e^cⁱ^s^e^ly^es^ti^m^a^te^d.

lead to a share 52% as large (0.25^.⁴⁴⁷⁶). It would also indicate that the average contribution within
a cumulative interval is ()/1pp+ times the ceiling of that cumulative interval. (This amount is
obtained by integrating the density function ⁽⁾¹^ppAx⁻ times x, and then dividing by the
cumulative probability). This ratio amounts to about 32% (0.4476/(1+0.4476)), indicating that the
average contribution in the group of contributors that gave less than $100 is $32. This amount is
less than the average of $50 that would occur with a linear relations. Thus the functional form
causes a larger share of individuals to remain under the cap compared to a linear form, but a
lower average contribution for those individuals.
The results will differ somewhat, however, depending on what assumptions are made about where
the contributors below the limit that have no tax liability fall relative to the contributors below the
limit. If these two groups are scattered randomly across the entire population share subject to the
caps one can just multiply the population ratios by the original share (of 24.1%) and the constant
share by the new dollar ceiling.
This assumption is not entirely reasonable, and an alternative one is that nontaxable contributors
take up the very bottom of the distribution and taxable contributors are stacked on top of these
individuals. This approach understates somewhat the share of the taxpaying population that is
covered, especially in the early years, but overstates the average contribution within that
population. In this case, the ratio of individuals included would be multiplied by the share of all
individuals (which we calculate at about 35% based on the ratios of joint and single returns) and
then subtract the amounts associated with the non-taxable share (which we estimate at about

10.9%). The taxable population share goes down by much more than in the approach used above.

However, the average contribution using this approach is much higher:
()()()/11.109/ppXNTPS++ [where NTPS is new taxable population share] and also
multiplied by the difference between the new ceiling and the ceiling associated with the
distribution running up to 10.9%, divided by the new ceilings).
Based on these relationships we predict the shares of individual revenues that would be covered
under the cap as shown in Table 3. The formula for dollars spent affecting taxpayers at the
margin is ()()0.7/0.71rXrss∗∗+−, where r is the ratio of the average contribution to the
ceiling, and s is the share of the taxable population falling under the cap.
For the $400/$800 cap in S. 1924, the share is estimated at 24%. Data presented that report for
1999 indicated that a significant fraction of contributions were made by individuals contributing
less than $800 and $400, 81.3% and 65.4%. As noted above, these numbers are much too high
because they must be adjusted for the distribution across taxable returns, and weighted for the
share of returns filed by single individuals, who tend to be more important at the lower income
levels. These adjustments led to an estimate that about 56.6% of individuals would have
contributions under these amounts. When adjusted for the lower value of deductions granted in

2002 compared with 1999 income levels, this adjustment resulted in a share of 50.4%. That is,

50.4% of the individuals who make contributions are likely to fall under the ceiling and thus are
likely to have a marginal inducement to contribute. We estimate that the average amount given
would be approximately 39% of the cap, while the share of those above the cap would be the cap
it self. This factor would cause the share to be 28%. In addition, the tax rate of individuals under
the cap will be lower than the rate of those over the cap, and we estimate the ratio of tax rates to

be about 70%. This effect would cause the share of revenue to fall to 23.8%. That is, only about

24% of the revenue cost would accrue to individuals where an incentive to give would still exist.

To estimate induced giving, we used an elasticity of 0.5, which resulted in an additional giving of
12 cents (0.5 X 23.8) per dollar of revenue loss. These estimates are, if anything, likely to be a
little high. Since about 70% of giving by non-itemizers is to religious organizations and about
70% of that amount is for sacramental services and similar services for members, about half, or 6
cents per dollar, would go to these member services.
In the analysis of the effects of a floor, the analysis uses the estimates of the number of
individuals who fall below the floor and their average deduction, along with overall average
deductions to determine the average deduction for those above the floor. That is:
()1^baADsAD sAD=+−
where AD refers to average deduction, s is the share of individuals giving below the floor, AD^b is
the average deduction for individuals below the floor and AD^a is the average deduction for those
above the floor. We consider the case of a floor of $500 for a single return and $1000 for a joint
return.
With these floors, each dollar of revenue loss is estimated to lead to about 64 cents of induced
contributions, with about half of that amount going to provide sacramental or other religious
services. According the data referred to above, a significant fraction of contributions were made
by individuals contributing less than $1000 and $500, 85.1% and 72.0%. Again, these raw
numbers are too high because they must be adjusted for the distribution across taxable returns and
weighted across taxpayers, resulting in a share of 61.9%. After adjusting for income levels, the
share is estimated at 56.2%. That is, 56.2% of the individuals who make contributions are likely
to fall under the floor.
For these individuals, we estimate that the average amount given would be approximately 39% of
the floor. Using the formula above, and weighting across returns and filing status, we estimate
that the average individual contributing over the floor amount would contribute 4.575 times the
floor. The floor makes the contribution an estimated 1.28 times as effective for these individuals
as a deduction allowed without a floor (4.575/(4.575-1)). This amount must be multiplied in turn
by the price elasticity, which is estimated at 0.5, to yield an induced contribution per dollar of 64
cents (0.5 X 1.28). As with other estimates, about half of this amount would go to fund religious
services and the remaining half would go to other purposes.
For a moving floor, the shares are estimated for each floor in each income class, the get data on
shares and giving ratios. Unfortunately, not all of these effects can be estimated with the data
available, since these data do not extend above $1000. Thus, it is impossible to extrapolate above
that level.
The results for both a floor and a ceiling as estimated for the Senate proposal indicate that 40.2%
of contributors fall below the floor and about 56.2% fall below the ceiling. On average, the tax
rates of individuals below the ceiling are about 70% of those above the ceiling (0.177 compared
to 0.254). Individuals below the floor have contributions that average about 41% of the floor
while those below the ceiling have contributions that average 39% of the ceiling.
The formula for calculating this effect is:

()^0.562^.³⁹^0.402^0.41^CF^∗∗⁻^∗
()( ) ()( )^0.562^0.39^0.4⁰²⁰^.41^.⁴³⁸^0.254^/⁰^.177^0.562⁰^.⁴⁰²^0.438⁰^.25⁴^/⁰^.177^CF^C^F^F^∗^∗⁻^∗^∗+^∗^∗⁻⁻^∗−^∗^∗
where C refers to ceiling and F refers to floor. The numerator is the share falling under the ceiling
times their average contribution, minus the share falling under the floor times their average
contribution. The denominator adds to this term the share with a contribution above the ceiling
weighted by their higher tax rate, and subtracts the amounts falling below the ceiling for each of
the two groups (above the ceiling, and between floor and ceiling).
This ratio is approximately 37%, indicating that 37% of the revenue loss goes to individuals who
would have a marginal incentive. Multiplying by an elasticity of 0.5 indicates that about 18 cents
of induced contributions occur per dollar of revenue loss. About half of these would reflect
contributions supporting religious services.
^J^aⁿ^e^{G. Grav}^elle
^Senⁱ^o^r^Sp^{ecialist i}ⁿ^Ecoⁿ^o^m^ic^P^o^licy
^j^g^rav^e^l^l^e^@^c^rs^.l^oc.^g^ov^{, 7-}⁷⁸²⁹