Tax Expenditure Report Checklist

To achieve its goals of improving transparency, encouraging accountability, and saving money, a tax expenditure report should have the features listed below.

Accessibility.  The report should be:

  • Published regularly.
  • Incorporated into the budget process.
  • Available on the Web.

Scope.  The report should include:

  • Tax expenditures related to all taxes.
  • All tax expenditures, including those with lower costs or those benefiting few taxpayers.
  • Explicit and implicit tax expenditures.
  • Tax expenditures enacted by the state that affect local government.

Detail.  The report should include:

  • The cost of the tax expenditure, using current data.
  • The cost in future years, to allow comparison with other proposed expenditures.
  • A description of the tax expenditure.
  • The relevant legal citation and year of enactment.
  • Detail on the taxpayers who benefit from the tax expenditure.
  • Separate reporting for the state and local revenue losses, where applicable.

Analysis.  The report should: 

  • Classify tax expenditures using the same categories as direct spending.
  • State the purpose of each tax expenditure.
  • Evaluate the extent to which that purpose has been accomplished.
  • Analyze the distribution of benefits by income level and size of business.

Data Source:  Center for Budget & Policy Priorities

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