Tax Law and Business Organization Strategy

Joint Committee on Taxation Publishes Analysis of Tax Expenditure Estimates

The Joint Committee on Taxation (JCT) periodically publishes an analysis of tax expenditures. The JCT has recently published another of its periodic tax expenditure analyses. The analyses are designed to aid policymakers and the public in understanding “the actual size of government, the uses to which government resources are put, and the tax and economic policy consequences that follow from the implicit or explicit choices made in fashioning legislation.” Tax expenditures are defined as “revenue losses attributable to provisions of the federal tax laws which allow a special exclusion, exemption or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.” As described by the JCT, tax expenditures include any reductions in income tax liabilities that result from special tax provisions or regulations that provide tax benefits to particular taxpayers. The estimates in the report are based on the provisions in federal tax law as enacted through Dec. 15, 2010. The report discusses the concept and measurement and tax expenditures, and also provides estimates of tax expenditures for the tax period covered as well as tables showing the distributions of tax returns and selected individual tax expenditures by income class. The document “Estimates of Federal Tax Expenditures for Fiscal Years 2010-2014” can be downloaded at

What I don’t understand is why the progressive rate structure (which is probably the single largest tax expenditure in the entire Internal Revenue Code) is not included in the list of tax expenditures. Actually, I do understand. But that is just another example of how the government mischaracterizes its actions and the information it provides us. The progressive rate structure meets the definition of a tax expenditure; yet it is not included. You can draw your own conclusion from that fact.

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