At a time when the federal government faces hard choices to reduce the
deficit and use available resources wisely, no federal expenditure or
subsidy should escape careful review. Tax expenditures, or revenues
forgone through preferential provisions in the tax code--for example,
deductions, exemptions, and credits--can be a useful part of federal
policy, but they should be scrutinized more closely and more often to
ensure that, when used, they are the most effective means to an end.
This report assesses the growth of federal revenues forgone through
income tax expenditures and presents three options for reviewing and
controlling their growth: (1) strengthening and extending techniques now
used by congressional tax-writing committees, (2) integrating tax
expenditures further into the budget process, and (3) reviewing tax
expenditures jointly with related federal outlay programs.
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