GAO Glossary of Terms and Definition (September 2005)
A revenue loss attributable to a provision of the federal tax laws that (1) allows a special exclusion, exemption, or deduction from gross income or (2) provides a special credit, preferential tax rate, or deferral of tax liability. Tax expenditures are subsidies provided through the tax system. Rather than transferring funds from the government to the private sector, the U.S. government forgoes some of the receipts that it would have collected, and the beneficiary taxpayers pay lower taxes than they would have had to pay. The Congressional Budget Act requires that a list of “tax expenditures” be included in the President’s budget. Examples include tax expenditures for child care and the exclusion of fringe benefits, such as employer- provided health insurance, from taxation.
Congressional Budget Process: An Explanation (Senate Budget Committee)
Definition of Tax Expenditures
Tax Expenditures: Revenue losses attributable to a special exclusion, exemption, or deduction from gross income or to a special credit, preferential rate of tax, or deferral of tax liability.
[The Congressional Budget Process: An Explanation, Appendix J (Glossary), Committee on the Budget of the U.S. Senate, S. Prt. 105-67 (Revised December 1998).]
Technical and Economic Assumptions