The Lifespan of a Tax Break

• Date: 01 September 2014
• Published date: 01 September 2014
• DOI: 10.1177/1532673X13516992
• Author: Jake Haselswerdt
• Subject Matter: Articles

American Politics Research

2014, Vol. 42(5) 731 –759

© The Author(s) 2014

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DOI: 10.1177/1532673X13516992

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Article

The Lifespan of a Tax

Break: Comparing

the Durability of Tax

Expenditures and

Spending Programs

Jake Haselswerdt1

Abstract

Scholars have recently begun to recognize the importance of policy durability

to the overall shape of public policy. Existing work on policy durability

focuses on the political environment rather than elements of policy design,

such as the delivery of benefits as a tax break instead of a direct outlay. I

argue that the unique characteristics of tax breaks, including the relatively

narrow reach of these policies, make them vulnerable to elimination. Using

a newly expanded data set, I test this claim by examining the longevity of

all federal tax and non-tax programs created between 1974 and 2003, and

find that tax expenditures are more vulnerable to elimination than non-

tax programs. Further analysis provides more support for my arguments,

as narrowly targeted tax expenditures prove more vulnerable than those

benefiting the public. This project makes an original contribution to the

literatures on policy durability, indirect governance, tax policy, and policy

feedback.

Keywords

public policy, congress, tax policy, indirect governance, policy feedback

1George Washington University, DC, USA

Corresponding Author:

Jake Haselswerdt, George Washington University, Monroe Hall, 4th Floor, 2115 G St. NW,

Washington, DC 20052, USA.

Email: jake.has@gmail.com

516992APRXXX10.1177/1532673X13516992American Politics ResearchHaselswerdt

research-article2014

732 American Politics Research 42(5)

Recent research in political science, public administration, and public policy

suggests that the post-enactment life of federal programs, agencies, and ini-

tiatives bears further study. In many ways, the politics of legislation only

begins at enactment. A new program might later be repealed or amended,

underfunded or defunded, or expanded beyond what its creators planned. In

addition, federal programs can alter the political arena in which policymak-

ing takes place—a dynamic often dubbed “policy feedback.” In short, the

shape of public policy is determined as much by what happens after the presi-

dent signs a bill into law as by what happens before.

What conditions shape the fate of enacted federal programs? Existing

studies largely focus on the political environment, examining external factors

that encourage or discourage lawmakers from revisiting existing programs.

Such studies yield important insights but tend to overlook the impact of pol-

icy design on the fate of policy programs. This omission is especially relevant

given the diversity of tools that lawmakers use today, including policies that

are delivered through indirect or obscured government involvement. Perhaps

the most important and costly of such tools is the tax break or “tax expendi-

ture,” which can achieve the same ends as direct subsidies by reducing the tax

burden of individuals and corporations. Are policies delivered through this

mechanism longer or shorter lived than other policies? Existing literature on

indirect policymaking and tax policy offers conflicting arguments and little

systematic evidence.

In this article, I argue that the unique political characteristics of tax expen-

ditures lead them to be more vulnerable to elimination than policies involving

direct outlays of government funds, particularly over time. I use a newly

expanded data set to explore the relative durability of federal spending pro-

grams and tax expenditures that were created in the modern era of congres-

sional budgeting. I find that programs delivered through the tax code are less

durable than regular spending programs over time, as I hypothesize.

Moreover, further analysis of the patterns of vulnerability within the tax

expenditure category provides support for my arguments. I conclude by con-

sidering the implications of these findings for our understanding of policy

longevity and indirect governance and for the prospects of significant tax

reform.

Policy Longevity and Program Characteristics

Traditionally, studies of American public policy and legislative decision

making have focused on the process through which new policies and pro-

grams are enacted. More recently, some scholars have recognized the impor-

tance of understanding the variation in the political lives of these policies and