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A Tax Expenditure is:

A Tax Expenditure is:. defined as “revenue losses … which allow a special exclusion, exemption, or deduction…” relative to “normal income tax law” (“normal” is left undefined and open to interpretation) 1

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A Tax Expenditure is:

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  1. A Tax Expenditure is: defined as “revenue losses … which allow a special exclusion, exemption, or deduction…” relative to “normal income tax law” (“normal” is left undefined and open to interpretation)1 intended to measure those tax provisions that could have been spending programs instead of tax breaks 1. The official definition is in the Congressional Budget and Impoundment Act of 1974 (Public Law 93-344), but its spirit was defined by Stanley Surrey, who in 1967 instructed his staff in the Treasury Office for Tax Policy to list income tax preferences that were similar to expenditure programs.

  2. Tax Expenditure Budget: The size and scope of tax expenditures, many of which are tax incentives for some behavior, e.g. mortgage interest deduction which encourages some to buy houses (and finance their purchases with debt).

  3. Size of Government Spending Categories Compared with Tax Expenditures, tax year 2007 Source: TPC tax expenditure estimates, OMB spending categories. 

  4. Grew until TRA86, up again Source: Burman, Geissler, and Toder (2008) at http://www.urban.org/publications/1001234.html

  5. Selected tax expenditures, nominal dollars Source: Annual JCT tax expenditure estimates. 

  6. Selected tax expenditures, relative to GDP Source: Annual JCT tax expenditure estimates, CBO projections for GDP. 

  7. See full paper at http://www.urban.org/publications/1001234.html

  8. See full paper at http://www.urban.org/publications/1001234.html

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