All Charitable Donations in Resourcia Are Tax Deductible

question 20

Essay

All charitable donations in Resourcia are tax deductible.However,it was found that the volume of charitable contributions declined significantly when the income tax rate in Resourcia was lowered.What is the reason behind such an outcome? Explain with an example.

---

Definitions:

Usage Tax

is a tax imposed on the use or consumption of certain goods and services, different from a sales tax which is collected at the time of sale.

Difference-In-Differences

A statistical technique used in econometrics and quantitative research to determine the effect of a specific intervention or treatment by comparing the before-and-after differences in outcomes between a control group and a treatment group.

Causal Effects

The relationship or impact that one variable has in directly changing the value or outcome of another variable.

Policy

A course or principle of action adopted or proposed by an organization or individual.