In 2011, the U.S. government will spend over $1 trillion on tax expenditures. These programs often fly under the radar of media and public opinion. This paper discusses obstacles to subjecting tax expenditures to the same scrutiny as direct outlays and offers some recommendations for incorporating them in the budget process. It then provides a framework of questions and principles policymakers should consider in evaluating these programs. We conclude that the size of tax subsidies should not be based on a claimant's marginal tax rate or itemizing status, implying that refundable credits are usually the best way to deliver them.
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