To fulfill their tasks, governments rely on public expenditures and taxes. Both influence the incentives and shape the decisions and actions of private economic agents. As governments resort to both instruments simultaneously, their combined theoretical impact on economic performance is a priori...

We examine the measurement of tax expenditures, as well as review issues concerning the classification of tax expenditures generally. We use calculations from NBER's TAXSIM to illustrate some of the problems with the current methodology for estimating tax expenditures. Unlike most previous work...