Abstract
Taxpayers may feel uncertain about their applicable marginal tax rates, so that estimates of tax effects based on marginal tax rates from tax returns may be misleading because of measurement error. This article incorporates personal uncertainty about marginal tax rates into taxpayer decisions on charitable giving and proposes an empirical specification to model taxpayer formulations of expected marginal tax rates. Based on 1990 data, the income elasticity estimate is consistent with measurement error, although the conventional measure of tax price does not contain significant measurement error. Moreover, the randomness of marginal tax rates exerts a negative effect on charitable giving.
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