Tax Expenditure

Tax Expenditure

The way in which a government uses a tax code to spend money. For example, suppose a government offers a tax credit for adopting a child. In such a case, an adoptive parent would pay less in taxes than he/she otherwise would, effectively receiving a subsidy from the government for adopting a child. Tax expenditures are popular ways for governments to encourage behaviors such as purchasing a home or having children.
References in periodicals archive ?
However, the tax expenditure concept is not without a long history of controversy.
In response to Surrey's pleas, the Congressional Budget and Impoundment Control Act of 1974 (CBICA) created a requirement that the Congressional Budget Office (CBO) and the Treasury Department each publish an annual list of tax expenditure estimates (197) that would "measure the decrease in individual and corporate income tax liabilities that result from [tax expenditure provisions].
Under the proposed TIMTA bill, it will create a tax expenditure account (TEA) in the national budget from which tax incentives are accounted for by all Investment Promotion Agencies (IPAs) and other concerned government agencies.
And all of that-the overstated size of the tax expenditure and the perceived unfairness of the current system-makes retirement savings tax breaks a really juicy target for tax reform.
The Perverse Effects of Existing Tax Expenditure Budgets
The DOF also wanted to 'mandate the inclusion of all taxes in the computation of tax expenditure, including VAT and local taxes.
The tax writers have indicated that their primary target is to eliminate the deduction for all state and local taxes, a tax expenditure that reduces federal revenue by about $100 billion a year (Joint Committee 2017).
Yet some readers of the federal government's tax expenditure reports or other commentary on this issue might be used to bigger numbers, and think it small.
Part II lays out the traditional behaviorist approach to tax expenditure analysis and its distaste for infra-marginal subsidies.
It also undermines the government's programmatic goal in granting the tax expenditure in the first place, whether that goal is to encourage employer spending on health plans, to promote home ownership, or some other public policy purpose.
At the same time, there should be no new taxes, except to reduce tax expenditure (exemptions) from direct and indirect taxes.