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

[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



https://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.