Tax expenditures as a phenomenon of the US tax system

Abstract

The article analyzes in detail the experience of applying such a phenomenon of fiscal policy as tax expenditures in the United States. It provides the definition of the term tax expenditures proposed by Stanley S. Surrey and enshrined in the Congressional Budget and Impoundment Control Act of 1974. The article reviews the main types and forms of tax expenditures giving their characteristics, as well as their features. It is concluded that the total costs of financing tax expenditures in 2019 were comparable to the level of discretionary military and non-military expenditures of the US federal budget. The analyses demonstrated that among the 13 largest tax expenditures in 2021 according to the JCT and OMB estimation the largest indicator of tax expenditures was the indicator "Exclusion of employer contributions for employee health insurance and medical care" in the amount of 190.3 billion USD. The last in the ranking is the indicator "Deduction of non-taxable social security benefits and railway pension payments" in the amount of 41.5 billion USD. Particular attention in the article is paid to the analysis of tax expenditures of individuals in the United States in the period from 1976 to 2027, measured in % of GDP.