Monday, September 9, 2013
Gregg Polsky (North Carolina), Rationally Cutting Tax Expenditures, 50 U. Louisville L. Rev. 643 (2012):
The discussion above shows that rationally cutting tax expenditures is
no easy task. First, tax expenditures must be categorized as mostly
allocative or mostly distributive provisions. This is difficult, as some tax
expenditures are claimed to be allocative but in reality may function mostly
as distributive because they do not affect behavior in a significant way.
Allocative tax expenditures should be evaluated to determine whether the
desired behavioral effect is beneficial, whether the tax expenditure is welldesigned
to accomplish that effect, and whether that effect is worth the
revenue loss in light of the current budget situation. In other words,
allocative tax expenditures should be evaluated like any other spending
program. Distributive tax expenditures, on the other hand, should be
evaluated to determine whether they either increase or decrease the fairness
of the tax system.
(Hat Tip: Bruce Bartlett.)