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Brief

How Big Are Total Individual Income Tax Expenditures, and Who Benefits from Them?

Eric Toder, Leonard E. Burman, Christopher Geissler
December 4, 2008
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Abstract

Analysts often add up tax expenditures to estimate an aggregate cost, but those tallies are inaccurate because they ignore interactions among provisions. We estimate that interactions raise the cost of nonbusiness tax expenditures by 5 to 8 percent, depending on whether an AMT patch is in effect. In 2007, these tax expenditures totaled about $750 billion5.5 percent of GDP. While tax expenditures benefit taxpayers in all income groups, high-income households gain more relative to income than low-income ones. Although the AMT eliminates some tax preferences, it increases overall tax expenditures because most AMT taxpayers face higher marginal tax rates.

Research Area

Individual Taxes Federal Budget and Economy
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Meet the Experts

  • Eric Toder
    Institute Fellow and Codirector, Tax Policy Center
  • Leonard E. Burman
    Institute Fellow
  • Christopher Geissler
Research report

New Evidence on The Effect of The TCJA On the Housing Market

Robert McClelland, Livia Mucciolo, Safia Sayed
March 30, 2022
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