Incentive and Distributional Consequences of Tax Expenditures.

• Position: Conferences

The NBER recently held a conference on "Incentive and Distributional Consequcnces of Tax Expenditures." James M. Poterba, the Director of the NBER's Public Economics Program, also of MIT, organized the March 2729 conference. It brought together academic researchers and tax professionals from various government entities to discuss the following papers:

Rosanne Altshuler, Rutgers University, and Robert D. Dietz, National Association of Home Builders, "Reconsidering Tax Expenditure Estimation: Challenges and Reforms"

Discussant: Thomas Barthold, Joint Committee on Taxation

Robert Carroll, Tax Foundation, and David Joulfaian and James Mackie, U.S. Treasury Department, "Income versus Consumption Tax Baselincs for Tax Expenditures"

Discussant: Eric Toder, Urban Institute

Susan J. Guthrie, and James R. Hines, Jr., University of Michigan and NBER, "Tax Expenditures and Government Purchases: The Case of U.S. Military Procurement Contracts after the Tax Reform Act of 1986"

Discussant: Christopher Heady, Organization for Economic Cooperation and Development

Jonathan Gruber, MIT and NBER, "The Tax Exclusion for Employer-Sponsored Health Insurance"

Discussant: Leonard Burman, Urban Institute

Deena Ackerman and Gerald Auten, U.S. Treasury Department, "Tax Expenditures from Noncash Charitable Contributions"

Discussant: John Karl Scholz, University of Wisconsin and NBER

Jon Bakija, Williams College, and Bradley T. Heim, U.S. Treasury Department, "How Does Charitable Giving Respond to Incentives and Income? Dynamic Panel Estimates Accounting for Predictable Changes in Taxation"

Discussant: Daniel Feenberg, NBER

James Poterba, and Todd Sinai, University of Pennsylvania and NBER, "Revenue Cost and Incentive Effects of Tax Expenditures for Owner-Occupied Housing"

Discussant: George Zodrow, Rice University

Mihir A. Desai and Monica Singhal, Harvard University and NBER, and Dhammika Dharmapala, University of Connecticut, "Investabte Tax Credits: The Case of the Low Income Housing Tax Credit"

Discussant: Therese McGuire, Northwestern University

Nada Eissa, Georgetown University and NBER, and Hilary Hoynes, University of California, Davis and NBER, "Redistribution and Tax Expenditures: The Earned Income Tax Credit" Discussant: Emmanuel Saez, University of California, Berkeley and NBER

Gilbert E. Metcalf, Tufts University and NBER, "Tax Expenditures for State and Local Tax Payments"

Discussant: Roger Gordon, University of California, San Diego and NBER

James M. Poterba, and Arturo Ramirez Verdugo, Protego, "Portfolio Substitution and the Tax Expenditure for State and Local Government Borrowing"

Discussant: William Gentry, Williams College

To most tax policy analysts and academics, the term "tax expenditure" means special provisions of the tax system that result in reduced tax liability for certain subsets of taxpayers. Moreover, for many in the tax policy community, the term suggests tax breaks for limited constituencies that result in a narrow tax base and higher marginal tax rates. Others are blunter: tax expenditures are loopholes that need to be closed. Altshuler and Dietz leave it to other authors to examine the legitimacy from tax policy or economic efficiency perspectives of tax expenditure provisions. They instead examine the measurement of tax expenditures and offer recommendations aimed at improving their value to analysts and policymakers. They use calculations from NBER's TAXSIM to illustrate some of the problems with the current methodology for estimating tax expenditures. Unlike most previous work on the topic, theirs focuses on how features of the current...