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Evaluating Broad-Based Approaches for Limiting Tax Expenditures

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  • Eric J. Toder
  • Joseph Rosenberg
  • Amanda Eng

Abstract

This paper evaluates six options to achieve across-the-board reductions to a group of major exclusions and deductions in the income tax: (1) limiting their tax benefit to a maximum percentage of income; (2) imposing a fixed dollar cap; (3) reducing them by a fixed-percentage amount; (4) limiting their tax saving to a maximum percentage of their dollar value; (5) replacing preferences with fixed rate refundable credits; and (6) including them in the base of the existing Alternative Minimum Tax (AMT). We discuss issues of design, implementation, and administration, and simulate the revenue, distributional, and incentive effects of the various options.

Suggested Citation

  • Eric J. Toder & Joseph Rosenberg & Amanda Eng, 2013. "Evaluating Broad-Based Approaches for Limiting Tax Expenditures," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(4), pages 807-832, December.
  • Handle: RePEc:ntj:journl:v:66:y:2013:i:4:p:807-832
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    File URL: https://www.ntanet.org/NTJ/66/4/ntj-v66n04p807-832-broad-based-limiting-tax-expenditures.html
    Download Restriction: Access to most recent volumes (current and past two years) is restricted to subscribers and members of the National Tax Association.

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    References listed on IDEAS

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    1. Leonard E. Burman & Christopher Geissler & Eric J. Toder, 2008. "How Big Are Total Individual Income Tax Expenditures, and Who Benefits from Them?," American Economic Review, American Economic Association, vol. 98(2), pages 79-83, May.
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    Cited by:

    1. Louis Kaplow, 2016. "A Distribution-Neutral Perspective on Tax Expenditure Limitations," NBER Chapters,in: Tax Policy and the Economy, Volume 31, pages 161-188 National Bureau of Economic Research, Inc.

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