Each year the Joint Committee on Taxation Staff publishes a report on Tax Expenditures for the House Committee on Ways and Means and the Senate Committee on Finance. The report is also submitted to the House and Senate Committees on Budget. Each report contains a discussion of the concept of tax expenditures, identification of new tax expenditures enacted into law, a general explanation on how the Staff measures tax expenditures, estimates of tax expenditures, and distributions of selected individual tax expenditures by income class.
In general, tax expenditures include any reductions in income tax liabilities that result from special tax provisions or regulations that provide tax benefits to particular taxpayers. Importantly, a tax expenditure estimate is not the same as a revenue estimate. Unlike revenue estimates, tax expenditure estimates do not incorporate any behavioral response of taxpayers or changes in the timing of tax payments.
Tax expenditure analysis can help both policymakers and the public to understand 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. This report is on tax expenditures for fiscal years 2009-2013.
As in the case of earlier reports, the estimates of tax expenditures in this report were prepared in consultation with the staff of the Office of Tax Analysis in the Department of the Treasury ("the Treasury"). The Treasury published its estimates of tax expenditures for fiscal years 2008-2014 in the Administration's budgetary statement of May 2009. The lists of tax expenditures in this Joint Committee staff report and the Administration's budgetary statement overlap considerably; the differences are discussed in Part I of this report under the heading "Comparisons with Treasury."
The Joint Committee staff has made its estimates based on the provisions in Federal tax law as enacted through September 30, 2009. Expired or repealed provisions are not listed unless they have continuing revenue effects that are associated with ongoing taxpayer activity. Proposed extensions or modifications of expiring provisions are not included until they have been enacted into law. The tax expenditure calculations in this report are based on the August 2009 Congressional Budget Office ("CBO") revenue baseline and Joint Committee staff projections of the gross income, deductions, and expenditures of individuals and corporations for calendar years 2008-2013. Part I of this report contains a discussion of the concept of tax expenditures. Part II is a discussion of the measurement of tax expenditures. Estimates of tax expenditures for fiscal years 2009- 2013 are presented in Table 1 in Part III. Table 2 shows the distribution of tax returns by income class, and Table 3 presents distributions of selected individual tax expenditures by income class. Joint Committee Print. JCS-1-10. January 11, 2010.
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