Reinvigorating Tax Expenditure Analysis and Its International Dimension‪.‬

I. INTRODUCTION Federal tax expenditures (i.e., subsidies and incentives provided through the federal income tax system) are an important feature of the American fiscal system that has grown even more significant in recent years. For example, the U.S. Government Accountability Office estimated that tax expenditures in fiscal year 2004 were equivalent to $896 billion of direct expenditures and concluded that, since 1988, tax expenditures have often exceeded direct, discretionary federal spending. (1) As a result, it is no surprise that debates regarding tax expenditures (including the magnitude and proper role of such expenditures) are a significant part of tax policy analysis.