SOURCE: Data derived from a Tax Policy Center paper, "How Large Are Tax Expenditures? A 2012 Update" by Donald Marron (April 2012), and the Congressional Budget Office, An Analysis of the President's Budgetary Proposals for Fiscal Year 2013: March 2012, using current law baseline figures. Compiled by PGPF.
NOTE: All figures reflect fiscal year 2012 projections.
The total revenue loss from tax expenditures is nearly equal to the total amount of revenue collected from corporate and individual income taxes combined. Tax expenditures are revenue losses from exclusions, deductions, exemptions, and credits available to individuals and businesses which reduce taxable income. Many analysts refer to them as “expenditures” because they provide financial assistance like a spending program would. Tax expenditures are not subject to annual review and are not treated as spending programs in the budget. On the individual income tax side, the largest tax expenditure is the exclusion of employer-sponsored health insurance. Other examples include a deduction for home mortgage interest, a deduction for student loan interest, and the Earned Income Tax Credit. On the corporate income tax side, expenditures include expenses for research and development, the production of energy, and the depreciation of machinery and equipment. While they may help achieve important public policy goals, tax expenditures can also distort individuals’ and businesses’ economic decision-making by incentivizing certain types of behavior or consumption.
Peter G. Peterson Foundation Chart Pack:
The PGPF chart pack illustrates that budget-making involves many competing priorities, limited resources, and complex issues. In this set of charts, we aim to frame the financial condition and fiscal outlook of the U.S. government within a broad economic, political, and demographic context.
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