The Tax Expenditure Budget Is a Zombie Accountant
49 Pages Posted: 18 Mar 2012 Last revised: 7 Feb 2013
Date Written: February 4, 2013
Like a student cutting the electrical cord on his television to help him study, governments across the globe rely on commitment devices to generate fiscal discipline. From the collapse of the Congressional Supercommittee in the United States to the near-cataclysmic failure of a mechanism designed to prevent the European Union debt crisis, the evidence suggests that faith in such commitment devices is misplaced. This article explains why by conducting a long-overdue autopsy on one such device that stubbornly refuses to stay dead: the tax expenditure budget. For almost half a century Congress has published a shadow budget to publicize the costs of tax subsidies to prevent abuse. Cataloguing the reasons for its demise has the further benefit of putting to rest the popular misconception that a failed commitment device like the tax expenditure budget can be resurrected as a reliable source of information.
Keywords: tax policy, tax expenditures, deficit, fiscal policy, tax shelters, commitment device, precommitment
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