Total Revenue Loss Estimates for Tax Expenditures in the Income Tax, by Provision statistics

[In millions of dollars (2,120 represents $2,120,000,000). For years ending Sept. 30. Tax expenditures are defined as revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of liability.



Function and provision	1999	2000	2001	2002

National defense:
Current law tax expenditures	2,120	2,140	2,160	2,180
Exclusion of benefits and allowances to armed forces personnel	2,120	2,140	2,160	2,180

International affairs:
Current law tax expenditures	14,415	15,595	16,685	17,015
Exclusion of income earned abroad by US citizens	2,330	2,550	2,790	3,040
Exclusion of certain allowances for federal employees abroad	635	665	695	725
Exclusion of income of foreign sales corporations	3,640	3,890	4,160	4,460
Inventory property sales source rules exception	1,050	1,100	1,150	1,250
Deferral of income from controlled foreign corporations ¹	5,800	6,200	6,600	7,000
Deferred taxes for financial firms on certain income earned overseas	960	1,190	1,290	540

Proposals affecting tax expenditures:
Simplify the foreign tax credit limitation
for dividends from 10/50 companies	0	80	168	102

General science, space, and technology:
Current law tax expenditures:	3,595	2,875	5,245	5,675

Credit for increasing research activities	1,705	1,010	3,360	3,710

Energy:
Current law tax expenditures	1,880	1,930	1,940	1,955
Expensing of exploration and development costs, fuels	-80	-15	-30	-10
Excess of percentage over cost depletion, fuels	265	275	280	280
Alternative fuel production credit	1,025	960	905	845
Exception from passive loss limitation for working interests
in oil and gas properties	30	25	25	25
Capital gains treatment of royalties on coal	65	65	70	70
Exclusion of interest on energy facility bonds	115	115	115	120
Enhanced oil recovery credit	225	260	295	340
New technology credit	50	60	80	90
Alcohol fuel credit	15	15	15	15
Tax credit and deduction for clean-fuel burning
vehicles and properties	85	90	105	100
Exclusion from income of conservation subsidies provided
by public utilities	85	80	80	80

Proposals affecting tax expenditures	0	0	198	371
Provide tax credit for energy-efficient building equipment	0	0	18	35
Provide tax credit for new energy-efficient homes	0	0	82	150
Extend electric vehicle tax credits, provide tax credit
for hybrid vehicles	0	0	0	4
Provide 15-year depreciable life for distributed power property	0	0	1	1
Extend and modify the tax credit for producing
electricity from certain sources	0	0	91	173
Provide tax credit for solar energy systems	0	0	9	19
Electricity restructuring	0	0	-3	-11

Natural resources and environment:
Current law tax expenditures	1,480	1,500	1,585	1,645
Expensing of exploration and development costs, nonfuel minerals	15	15	20	20
Excess of percentage over cost depletion, nonfuel minerals	225	230	245	250
Exclusion of interest on bonds for water, sewage, and
hazardous waste facilities	460	460	470	475
Capital gains treatment of certain timber income	65	65	70	70
Expensing of multiperiod timber growing costs	495	500	530	565
Investment credit and seven-year amortization for
reforestation expenditures	10	10	10	15
Tax incentives for preservation of historic structures	210	220	240	250

Proposals affecting tax expenditures:
Provide Better America Bonds to improve the environment	0	0	8	41

Agriculture:
Current law tax expenditures	885	915	960	995
Expensing of certain capital outlays	70	70	75	75
Expensing of certain multiperiod production costs	85	85	90	95
Treatment of loans for solvent farmers	10	10	10	10
Capital gains treatment of certain income	635	665	695	725
Income averaging for farmers	75	75	80	80
Deferral of gain on sale of farm refiners	10	10	10	10

Commerce and housing:
Current law tax expenditures	227,870	235,565	247,145	255,305
Financial institutions and insurance:
Exemption of credit union income	1,470	1,550	1,650	1,765
Excess bad debt reserves of financial institutions	60	65	55	45
Exclusion of interest on life insurance savings	13,920	14,985	16,130	17,365
Special alternative tax on small property and casualty
insurance companies	5	5	5	5
Tax exemption of insurance companies owned by
tax-exempt organizations	220	225	235	240
Small life insurance company deduction	100	100	100	100
Housing:
Exclusion of interest on owner-occupied mortgage subsidy bonds	905	915	920	930
Exclusion of interest on rental housing bonds	155	155	160	160
Deductibility of mortgage interest on owner-occupied homes	56,920	58,815	60,925	63,240
Deductibility of State and local property tax
on owner-occupied homes	21,215	22,185	23,075	24,000
Deferral of income from post-1987 installment sales	995	1,015	1,035	1,055
Capital gains exclusion on home sales	18,000	18,540	19,095	19,670
Exception from passive loss rules for $25,000 of rental loss	5,315	5,035	4,790	4,555
Credit for low-income housing investment	2,820	3,055	3,195	3,300
Accelerated depreciation on rental housing ¹	3,710	3,985	4,225	4,500

Commerce:
Cancellation of indebtedness	40	25	15	15
Exceptions from imputed interest rules	160	160	160	165
Capital gains (except agriculture, timber, iron ore, and coal) ¹	39,405	40,575	41,780	43,025
Capital gains exclusion of small corporation stock	5	5	5	5
Step-up basis of capital gains at death	25,800	27,090	28,240	29,370
Carryover basis of capital gains on gifts	175	185	195	205
Ordinary income treatment of loss from small
business corporation stock sale	35	35	40	40
Accelerated depreciation of buildings other than rental housing ¹	1,660	710	-435	-755
Accelerated depreciation of machinery and equipment ¹	26,445	27,740	32,830	33,345
Expensing of certain small investments (normal tax method)	1,465	1,590	1,925	1,965
Amortization of start-up costs (normal tax method)	200	205	205	215
Graduated corporation income tax rate ¹	6,360	6,300	6,275	6,460
Exclusion of interest on small-issue bonds	310	315	315	320

Proposals affecting tax expenditures	0	0	330	533
Increase and index low-income housing tax credit per-capita cap	0	0	6	55
Bridge the Digital Divide	0	0	107	272
Simplify, retarget and expand expensing for small business	0	0	217	206

Transportation:
Current law tax expenditures	1,870	1,970	2,080	2,200
Deferral of tax on shipping companies	15	15	15	15
Exclusion of reimbursed employee parking expenses	1,725	1,805	1,895	1,995
Exclusion for employer-provided transit passes	130	150	170	190

Community and regional development:
Current law tax expenditures	1,260	1,415	1,505	1,370
Investment credit for rehabilitation of
structures (other than historic)	25	25	30	30
Exclusion of interest for airport, dock, and similar bonds	730	735	740	750
Exemption of certain mutuals and cooperatives income	60	60	60	65
Empowerment zones and enterprise communities	330	445	500	465
Expensing of environmental remediation costs	115	150	175	60

Proposals affecting tax expenditures	0	0	66	487
Provide New Markets Tax Credit	0	0	30	222
Extend Empowerment Zone (EZ) tax incentives and authorize
additional EZs	0	0	36	167
Make permanent the expensing of brownfields remediation costs	0	0	0	98

Education, training, employment, and social services:
Current law tax expenditures	34,070	36,030	37,565	38,745
Education:
Exclusion of scholarship and fellowship income (normal tax method)	1,085	1,110	1,120	1,130
HOPE tax credit	4,595	4,925	5,125	5,145
Lifetime Learning tax credit	2,170	2,375	2,420	2,465
Education Individual Retirement Accounts	0	10	25	40
Deductibility of student-loan interest	240	265	310	350
Deferral of state prepaid tuition plans	120	175	225	275
Exclusion of interest on student-loan bonds	245	250	255	255
Exclusion of interest on bonds for private nonprofit
educational facilities	590	595	600	600
Credit for holders of zone academy bonds	5	10	20	35
Exclusion of interest on savings bonds transferred to
educational institutions	10	15	15	15
Parental personal exemption for students age 19 or over	915	965	1,015	1,055
Deductibility of charitable contributions (education)	2,525	2,650	2,765	2,910
Exclusion of employer-provided educational assistance	220	235	250	175
Training, employment, and social services:
Work opportunity tax credit	270	455	465	350
Welfare-to-work tax credit	35	60	80	80
Exclusion of employer-provided child care	645	670	700	725
Adoption assistance	125	140	140	125
Exclusion of employee meals and lodging (other than military)	650	680	710	740
Credit for disabled access expenditures	50	50	55	55
Expensing of costs of removing certain architectural
barriers to the handicapped	0	0	5	5
Deductibility of charitable contributions, other than
education and health	19,220	20,015	20,860	21,780
Exclusion of certain foster care payments	35	40	40	45
Exclusion of parsonage allowances	320	340	365	390

Proposals affecting tax expenditures	0	66	1,363	3,654
Provide College Opportunity tax cut	0	0	395	2,009
Provide incentives for public school construction and modernization	0	0	36	174
Expand exclusion for employer-provided educational assistance
to include graduate education	0	66	275	90
Eliminate 60-month limit on student loan interest deduction	0	0	23	80
Eliminate tax when forgiving student loans subject to
income contingent repayment	0	0	0	0
Provide tax relief for participants in certain federal
education programs	0	0	3	7
Provide tax incentives for employer-provided childcare facilities	0	0	42	88
Replace support test with residency test (limited to children)	0	0	66	97
Allow deduction for charitable contributions by
non-itemizing taxpayers	0	0	516	1,062
Increase limit on charitable donations of appreciated property	0	0	7	47

Health:
Current law tax expenditures	82,880	89,290	95,150	101,690
Exclusion of employer contributions for medical insurance
premiums and medical care	69,610	75,095	80,570	86,175
Self-employed medical insurance premiums	935	1,250	1,380	1,545
Workers' compensation insurance premiums	4,420	4,585	4,555	4,935
Medical savings accounts	20	30	30	30
Deductibility of medical expenses	3,695	3,910	4,160	4,440
Exclusion of interest on hospital construction bonds	1,210	1,225	1,235	1,250
Deductibility of charitable contributions (health)	2,675	2,800	2,930	3,080
Tax credit for orphan drug research	70	80	90	100
Special Blue Cross/Blue Shield deduction	245	315	200	135

Proposals affecting tax expenditures	0	0	128	1,333
Assist taxpayers with long-term care needs	0	0	109	1,150
Encourage COBRA continuation coverage	0	0	0	41
Provide tax credit for Medicare buy-in program	0	0	0	5
Provide tax relief for workers with disabilities	0	0	18	128
Provide tax relief to encourage small business health plans	0	0	1	9
Encourage development of vaccines for targeted diseases	0	0	0	0

Income security:
Current law tax expenditures	140,290	147,665	153,085	159,305
Exclusion of railroad retirement system benefits	395	405	410	415
Exclusion of workmen's compensation benefits	5,185	5,330	5,785	6,040
Exclusion of public assistance benefits (normal tax method)	345	360	375	390
Exclusion of special benefits for disabled coal miners	75	75	70	70
Exclusion of military disability pensions	130	130	135	140
Net exclusion of pension contributions and earnings:
Employer plans	83,780	88,830	92,390	97,085
Individual Retirement Accounts	13,350	15,050	15,975	17,030
Keogh plans	5,230	5,550	5,895	6,255
Exclusion of other employee benefits:
Premiums on group term life insurance	1,700	1,740	1,780	1,820
Premiums on accident and disability insurance	185	195	205	215
Income of trusts to finance supplementary unemployment benefits	0	0	0	5
Special ESOP rules	1,130	1,175	1,205	1,250
Additional deduction for the blind	30	30	30	30
Additional deduction for the elderly	1,785	1,830	1,890	1,955
Tax credit for the elderly and disabled	35	35	35	35
Deductibility of casualty losses	255	265	275	285
Child credit	19,435	19,575	19,480	18,970
Earned income tax credit	4,825	4,700	4,790	4,985
Credit for child and dependent care expenses	2,420	2,390	2,360	2,330

Proposals affecting tax expenditures	0	5	2,648	4,605
Increase, expand and simplify child and dependent care tax credit	0	0	121	589
Increase and simplify the earned income tax credit	0	0	2,293	1,936
Provide marriage penalty relief; increase standard deduction	0	0	248	843
Establish Retirement Savings Accounts	0	0	0	657
Provide small business tax credit for automatic contributions
for non-highly compensated employees	0	0	0	157
Provide tax credit for plan start up and administrative
expenses; provide for payroll deduction IRAs	0	1	18	35
Provide for the SMART plan	0	0	44	65
Enhance the 401(k) SIMPLE plan	0	0	25	61
Accelerate vesting for qualified plans	0	0	-214	-137
Other changes affecting retirement savings, security and portability	0	0	53	207
Make first $2,000 of severance pay exempt from income tax	0	0	43	174
Exempt holocaust reparations from federal income tax	0	4	17	18

Social Security:
Current law tax expenditures	23,300	24,505	25,765	27,295
Exclusion of social security benefits:
Social Security benefits for retired workers	17,135	18,010	18,885	19,995
Social Security benefits for disabled	2,390	2,595	2,830	3,090
Social Security benefits for dependents and survivors	3,775	3,900	4,050	4,210

Veterans benefits and services:
Current law tax expenditures	3,120	3,265	3,405	3,545
Exclusion of veterans death benefits and disability compensation	2,940	3,070	3,200	3,335
Exclusion of veterans pensions	65	70	75	80
Exclusion of Montgomery GI bill benefits	75	85	90	90
Exclusion of interest on veterans housing bonds	40	40	40	40

General purpose fiscal assistance:
Current law tax expenditures	63,005	65,805	68,265	70,775
Exclusion of interest on public purpose bonds	22,750	22,975	23,205	23,440
Deductibility of nonbusiness state and local taxes
other than on owner-occupied homes	37,740	40,240	42,390	44,735
Tax credit for corporations receiving income from doing
business in US possessions	2,515	2,590	2,670	2,600

Proposals affecting tax expenditures	0	0	35	259
Provide tax credit to encourage electronic filing
of individual income tax returns	0	0	0	192
Extend and modify Puerto Rico economic activity tax credit	0	0	35	67

Interest:
Current law tax expenditures	1,015	1,065	1,115	1,175
Deferral of interest on US savings bonds	1,015	1,065	1,115	1,175

Z $2.5 million or less.
1 Normal Tax method.

Source: U.S. Office of Management and Budget, Budget of the United States Government, annual. http://www.gpo.gov/usbudget/index.html

http://www.allcountries.org/uscensus/539_total_revenue_loss_estimates_for_tax.html

These tables are based on figures supplied by the United States Census Bureau, U.S. Department of Commerce and are subject to revision by the Census Bureau.

Copyright © 2006 Photius Coutsoukis and Information Technology Associates, all rights reserved.