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Reconsidering Tax Expenditure Estimation: Challenges And Reforms

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Author Info

  • Rosanne Altshuler

    ()
    (Rutgers University Department of Economics)

  • Robert Dietz

    ()
    (National Association of Home Builders)

Abstract

We examine the measurement of tax expenditures and offer recommendations aimed at improving their value to analysts and policymakers. We use calculations from NBER’s TAXSIM to illustrate some of the problems with the current methodology for estimating tax expenditures. Unlike most previous work on the topic, we focus on how features of the current tax system complicate and compromise the value of information provided by the tax expenditure budget. Our recommendations for reform include presenting revenue estimates for major tax expenditures, reporting some negative tax expenditures, grouping expenditures by conceptually-linked categories, and establishing an appendix for tax expenditure estimates of permanent versions of expiring provisions and AMT interaction effects.

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Bibliographic Info

Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200804.

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Length: 20 pages
Date of creation: 03 Jul 2008
Date of revision:
Handle: RePEc:rut:rutres:200804

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Related research

Keywords: tax expenditures; tax incentives; tax revenues;

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References

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  1. Rosanne Altshuler & Jonathan Ackerman, 2006. "Constrained Tax Reform: How Political and Economic Constraints Affect the Formation of Tax Policy Proposals," Departmental Working Papers 200624, Rutgers University, Department of Economics.
  2. repec:nbr:nberch:6788 is not listed on IDEAS
  3. Barthold, Thomas A. & Koerner, Thomas & Navratil, John F., 1998. "Effective Marginal Tax Rates Under the Federal Individual Income Tax: Death by One Thousand Pin Pricks?," National Tax Journal, National Tax Association, vol. 51(n. 3), pages 553-64, September.
  4. Daniel Feenberg & James Poterba, 2003. "The Alternative Minimum Tax and Effective Marginal Tax Rates," NBER Working Papers 10072, National Bureau of Economic Research, Inc.
  5. Burman, Leonard E., 2003. "Is the Tax Expenditure Concept Still Relevant?," National Tax Journal, National Tax Association, vol. 56(3), pages 613-27, September.
  6. Todd Sinai & Joseph Gyourko, 2004. "The (Un)Changing Geographical Distrituion of Housing Tax Benefits: 1980-2000," NBER Chapters, in: Tax Policy and the Economy, Volume 18, pages 175-208 National Bureau of Economic Research, Inc.
  7. Davie, Bruce F., 1994. "Tax Expenditures in the Federal Excise Tax System," National Tax Journal, National Tax Association, vol. 47(1), pages 39-62, March Cit.
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Citations

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Cited by:
  1. Rosanne Altshuler & Robert D. Dietz, 2008. "Tax Expenditure Estimation and Reporting: A Critical Review," NBER Working Papers 14263, National Bureau of Economic Research, Inc.
  2. James M. Poterba & Todd M. Sinai, 2008. "Income Tax Provisions Affecting Owner-Occupied Housing: Revenue Costs and Incentive Effects," NBER Working Papers 14253, National Bureau of Economic Research, Inc.
  3. Květa Kubátová & Martin Jareš, 2011. "Identification and Quantification of Tax Reliefs in the Czech Republic in the Year 2008," Politická ekonomie, University of Economics, Prague, vol. 2011(4), pages 475-489.
  4. Altshuler, Rosanne & Dietz, Robert, 2011. "Reconsidering Tax Expenditure Estimation," National Tax Journal, National Tax Association, vol. 64(2), pages 459-89, June Cita.
  5. repec:nbr:nberch:6793 is not listed on IDEAS

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