Introduction: Economic Analysis of Tax Expenditures

Many economists and policy analysts argue that broadening the tax base is one of the most efficient ways to raise income tax revenues. Current tax deductions, credits, and exclusions, which are collectively known as "tax expenditures," reduce tax revenues and create complicated incentives that affect the ways taxpayers earn and spend their incomes. Because these tax provisions distort behavior relative to a neutral tax code, it is possible that eliminating some or all of them could simultaneously raise revenue and reduce tax-induced distortions of economic activity. Sweeping changes in tax expenditures have been recommended in several recent high profile reform proposals. The papers in this special issue of the National Tax Journal examine the revenue effects of, the distribution of benefits from, and the efficiency costs of current tax expenditures. These papers will be a valuable input for the analysis of potential reforms, and will help to identify unresolved issues that deserve further research attention.