Analysis On The Tax Incentive Policy To Promote Educational Donation

Educational investment is the fundamental and strategic investment that supportsour country’s long-term development, and it is also the material foundation topromote the development of educational. With the rise of educational demand, toincrease the educational investment has become a hot issue about educationaldevelopment for all the countries. Educational demand exceeding supply has alsobecome the intrinsic driving force for educational donation. As one of the four mainsubjects which share the educational cost, educational donation has become thenecessary supplement of national fiscal educational funds, and it is helpful to activatethe huge social capital market. The positive externality of educational donation andthe unique "voluntary failure" of charity organizations have strongly explained thenecessity of government intervention to support the educational donation. As animportant method of government macro-control, tax can play an important role insupporting the educational donation by affecting some factors such as environment ofeducational donation, price and so on.In this paper, the theoretical foundations are tax regulation theory and thepositive externality of educational donation, while the tax incentive policy of China’seducational donation is the main line. The author has established the utilitymaximization model, and made a detailed qualitative analysis about the mechanism ofwhich the entirely and partly Pre-tax deduction policies encourage educationaldonation from income effect and price effect with the help of derivation of equationand graphic description, and further analyzed the private return rate and social returnrate which are produced by educational donation. According to the analysis, we findthat it is effective for government to implementing tax incentive policy only if privaterate of return is lower than the expectation return of individuals or enterprises andthere is a quite high social return rate from educational donation. On this basis,integrating China’s reform process and current situation of educational donation taxpreferential policies, we make a deeply analysis of China’s shortcomings ineducational donation tax preferential policies. Combining with the shortcomings intax incentives for educational donation and searching for action point and actionmethod of tax policy, we offer proposals and recommendations to improve taxincentives policy of educational donation and further promote the development of education donation in five different aspects as follows: optimizing the externalenvironment of educational donation, expanding the tax preference scope ofeducational donation, standardizing Pre-tax deduction policies of educationaldonation, enhancing the level of tax collection and offering other supportingmeasures.