Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform

Leonard E. Burman and Marvin Phaup

No 17268, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: One possible explanation for the difficulty in controlling the budget is that a major component of spending —tax expenditures—receives privileged status. It is treated as tax cuts rather than spending. This paper explores the implications of that classification and illustrates how it can lead to higher taxes, larger government, and an inefficient mix of spending (too many tax expenditures). The paper then analyzes alternative budgeting approaches that would explicitly incorporate and measure tax expenditures. It concludes by analyzing ways to control tax expenditures (and other spending) and the special challenges presented by tax expenditures.

JEL-codes: H21 H24 H50 H62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2011-08
Note: PE
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Published as Leonard E. Burman, Marvin Phaup. "Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform," in Jeffrey Brown, editor, "Tax Policy and the Economy, Volume 26" University of Chicago Press (2012)

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