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