TAX EXPENDITURES: BACKGROUND AND EVALUATION CRITERIA AND QUESTIONS
GAO-13-167SP: Guide for Evaluating Tax Expenditures

TAX EXPENDITURES: BACKGROUND AND EVALUATION CRITERIA AND QUESTIONS

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November 29, 2012

The Honorable John Lewis 

Ranking Member

Committee on Ways and Means 

Subcommittee on Oversight

United States House of Representatives 

The Honorable Lloyd Doggett 

United States House of Representatives 

Tax expenditures are reductions in a taxpayer’s tax liability that are the result of special 

exemptions and exclusions from taxation, deductions, credits, deferrals of tax liability, or 

preferential tax rates. Similar to spending programs, tax expenditures represent a substantial 

federal commitment to a wide range of mission areas. If the Department of the Treasury 

(Treasury) estimates are summed, an estimated $1 trillion in revenue was forgone from the 173 

tax expenditures reported for fiscal year 2011.1

Our previous work has shown that, once enacted, tax expenditures and their relative 

contributions toward achieving federal missions and goals are often less visible than spending 

programs, which are subject to more systematic review.

Tax expenditures are often aimed at policy goals 

similar to those of federal spending programs. Existing tax expenditures, for example, are 

intended to encourage economic development in disadvantaged areas, finance postsecondary 

education, and stimulate research and development. For some tax expenditures, forgone 

revenue can be of the same magnitude or larger than related federal spending for some mission 

areas. The revenue the federal government forgoes from a tax expenditure reduces revenue 

available to fund other federal activities, requires higher tax rates to raise any given amount of 

revenue, increases the budget deficit, or reduces any budget surplus.

2 One reason for this is that they often 

operate, in practice, like entitlement programs not subject to annual appropriations. Since 1994, 

we have recommended greater scrutiny of tax expenditures, as periodic reviews could help 

determine how well specific tax expenditures work to achieve their goals and how their benefits 

and costs compare to those of programs with similar goals. However, the Executive Branch has 

made little progress in developing a framework for systematically evaluating tax expenditures.3

 

1

Treasury does not report tax expenditures that result in revenue losses of less than $5 million for each year of the 7 

year period for which it reports tax expenditure estimates. Summing revenue loss estimates does not take into 

account possible interactions between individual provisions or potential behavioral responses to changes in these 

provisions on the part of taxpayers. Additionally, Treasury’s revenue loss estimates include the effect of certain tax 

credits on receipts only and not the effect of the credits on outlays, which Treasury reports separately.

2

GAO, Government Performance and Accountability: Tax Expenditures Represent a Substantial Federal Commitment 

and Need to Be Reexamined, GAO-05-690 (Washington, D.C.: Sept. 23, 2005) and Tax Policy: Tax Expenditures 

Deserve More Scrutiny, GAO/GGD/AIMD-94-122 (Washington, D.C.: June 3, 1994). 

3

GAO-05-690 and GAO/GGD/AIMD-94-122. 
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More recently, the Government Performance and Results Act (GPRA) Modernization Act of 

2010 (GPRAMA)4 established a framework for providing a more crosscutting and integrated 

approach to focusing on results and improving government performance, including for tax 

expenditures. GPRAMA makes clear that tax expenditures are to be included in identifying the 

range of federal agencies and activities that contribute to crosscutting goals. Moving forward, 

GPRAMA implementation can help inform tough choices in setting priorities as policymakers 

address the rapidly building fiscal pressures facing our national government.5

Given your interest in tax expenditures’ effectiveness, you asked us to develop a framework that 

could be used to evaluate their performance. In response, this guide describes criteria for 

assessing tax expenditures and develops questions Congress can ask about a tax 

expenditure’s performance.

As agreed with your offices, unless you publicly announce the contents of this guide earlier, we 

plan no further distribution until 30 days from the report date. At that time, we will send copies to 

interested congressional committees, the Director of the Office of Management and Budget 

(OMB), Secretary of the Treasury, Commissioner of Internal Revenue, and other interested 

parties. In addition, the guide will be available at no charge on the GAO website at 

http://www.gao.gov. If you or your staffs have any questions about this guide, please contact me 

at (202) 512-9110 or whitej@gao.gov. Contact points for our Offices of Congressional Relations 

and Public Affairs may be found on the last page of this report. GAO staff who made key 

contributions to this guide are listed in appendix II.

Sincerely,

James R. White

Director

Strategic Issues

 

4

Pub. L. No. 111-352, 124 Stat. 3866 (Jan. 4, 2011).

5

For more information on GPRAMA, see GAO, Managing for Results: A Guide for Using the GPRA Modernization Act 

to Help Inform Congressional Decision Making, GAO-12-621SP (Washington, D.C.: June 15, 2012).
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TAX EXPENDITURES: DEFINITION AND BACKGROUND

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Tax expenditures are tax provisions that are exceptions to the “normal structure” of individual 

and corporate income tax necessary to collect federal revenue.6 These preferences can have 

the same effects as government spending programs; hence the name tax expenditures. The 

Congressional Budget and Impoundment Control Act of 19747

Table 1: Examples of Provisions That Are Tax Expenditures When They Are Exceptions to the Normal 

Tax Structure

identified six types of tax 

provisions that are considered tax expenditures when they are exceptions to the normal tax 

structure, as described in table 1.

Tax expenditure Description a Examples 

Exclusion Excludes income that would otherwise 

constitute part of a taxpayer’s gross 

income. 

Employees generally pay no income taxes on 

contributions their employers make on their 

behalf for medical insurance premiums.

Exemption Reduces gross income for taxpayers 

because of their status or circumstances. 

Taxpayers may be able to reduce their tax 

liability if they have a dependent who is a child 

aged 19 through 23 and is a full-time student.

Deduction Reduces gross income due to expenses 

taxpayers incur. 

Taxpayers may be able to deduct state and 

local income taxes and property taxes. 

Credit Reduces tax liability dollar-for-dollar. 

Additionally, some credits are refundable 

meaning that a credit in excess of tax 

liability results in a cash refund. 

Taxpayers with children under age 17 

potentially can qualify for up to a $1,000 

partially refundable, per child credit, provided 

their income does not exceed a certain level. 

Preferential tax rate Reduces tax rates on some forms of 

income. 

Capital gains on certain income are subject to 

lower tax rates under the individual income tax. 

Deferral Delays recognition of income or accelerates 

some deductions otherwise attributable to 

future years. 

Taxpayers may defer paying tax on interest 

earned on certain U.S. savings bonds until the 

bonds are redeemed.

Source: GAO.

a

Types of tax expenditures that are identified in the Congressional Budget and Impoundment Act of 1974. 

The different types of tax expenditures described in table 1 provide different levels of tax savings 

for different taxpayers. Exclusions, exemptions, deductions, and preferential tax rates generally 

provide larger tax savings to taxpayers facing higher marginal tax rates. On the other hand, 

credits provide the same tax savings regardless of a taxpayer’s marginal tax rate. Deferrals will 

generally provide larger tax savings to taxpayers who expect to face a lower tax rate in the future.

Determining whether a tax code provision meets the definition of a tax expenditure requires 

judgment. Provisions must be compared to a “normal structure,” or baseline, and the 

Congressional Budget and Impoundment Control Act did not define a specific baseline 

structure. As a consequence, a provision that would be considered a tax expenditure under an 

income tax system, under which income generally would be taxed as it is accrued, may not be 

considered a tax expenditure under a consumption tax system, under which income saved or 

invested would not be taxed until it is consumed. For example, several tax provisions that 

Treasury classifies as tax expenditures based on an income tax system, such as contributions 

 

6

The concept of tax expenditures extends beyond the income tax. Tax expenditures also exist for other types of 

taxes, such as excise and payroll taxes. 

7

Pub. L. No. 93-344, § 3, 88 Stat. 297, 299 (July 12, 1974), codified at 2 U.S.C. § 622(3).
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TAX EXPENDITURES: DEFINITION AND BACKGROUND

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and earnings for employer pension and 401(k) plans, would not be classified as tax 

expenditures under a consumption tax system.8

Even with an income tax, judgments must be made about what is normal and what is an 

exception. For example, Treasury and the congressional Joint Committee on Taxation (JCT), 

which both estimate revenue losses from tax expenditures, have decided that the personal 

exemption is part of the normal income tax and not a tax expenditure. However, the exemption 

for child dependents ages 19 through 23 who are full-time students is a tax expenditure. 

Furthermore, some provisions that limit tax liability, such as business expense deductions, are 

not considered to be tax expenditures—they are part of the normal income tax structure 

because they are costs of earning income.

Both Treasury and JCT estimate the revenue loss for each tax provision they have identified as 

a tax expenditure.9 For a particular tax expenditure provision, Treasury and JCT both calculate 

the tax expenditure as the difference between tax liability under current law and what the tax 

liability would be if the provision were eliminated and the item were treated as it would be under 

a “normal” income tax.10

 

8

For more detailed discussion, see appendix III of GAO-05-690 and Office of Management and Budget, Analytical 

Perspectives, Budget of the United States Government, Fiscal Year 2009 (Washington, D.C.: 2008). 

9

OMB, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2013 (Washington, D.C.: 2012) 

and Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2011-2015, JCS-1-12 

(Washington, D.C.: Jan. 17, 2012). 

10An alternative way to measure a tax expenditure is to express its value in terms of “outlay equivalent,” or the dollar 

size of a direct spending program that would provide taxpayers with net benefits that would equal what they now 

receive from the tax expenditure. The major difference between outlay equivalents and the tax expenditure estimates 

is accounting for whether a tax expenditure converted into an outlay payment would itself be taxable, so that a grossup might be needed to deliver the equivalent after-tax benefits.
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TAX EXPENDITURES: DEFINITION AND BACKGROUND

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Hypothetical Examples of Tax Expenditure Revenue Loss Estimates for One Taxpayer

In the case of some tax credits, such as the child tax credit, the tax expenditure estimate for one taxpayer is 

straightforward. A $1,000 credit claim reduces the taxpayer’s tax liability by $1,000—assuming the taxpayer has a 

tax liability of at least $1,000 and is not subject to applicable income phaseouts—compared to what the taxpayer 

would have paid under the normal tax system assumed by Treasury and JCT. This $1,000 amount would be the 

revenue loss estimate related to this particular taxpayer’s claim.

With some deductions, the comparison to a normal tax may be more complicated. Consider a taxpayer with the 

following characteristics.

• Tax rate: 25 percent.

• Total potential itemized deductions: $10,000.

• Amount of potential itemized deductions from charitable cash contributions: $5,000.

• Applicable standard deduction if the taxpayer does not itemize deductions: $6,000.

To maximize deductions, this taxpayer would be expected to itemize $10,000 of deductions, including $5,000 of 

charitable cash contributions, on his or her tax return rather than claim the $6,000 standard deduction. Estimating 

the revenue loss for the charitable deduction would require measuring the tax liability with and without the charitable 

deduction. If the provision allowing charitable deductions was repealed, to maximize deductions, the taxpayer would 

be expected to take the standard deduction of $6,000, since it would be greater than the taxpayer’s remaining 

itemized deductions of $5,000. The tax expenditure revenue loss for the cash contribution deduction would be 

based on the $4,000 difference between the itemized deductions that include cash contributions and the standard 

deduction times the 25 percent tax rate, or $1,000.

Treasury and JCT calculate separately the revenue loss for each tax expenditure under the 

assumption that all other tax expenditures remain in the tax code. Also, they assume taxpayer 

behavior, such as the size of mortgages taxpayers obtain, remains constant. While, in general, 

the tax expenditure lists Treasury and JCT publish annually are similar, they differ somewhat in 

the number of tax expenditures reported and the estimated revenue loss for particular 

expenditures because the organizations use different (1) income tax baselines; (2) de minimis 

amounts, which are the minimum amount of revenue loss threshold for Treasury and JCT to 

report a tax expenditure; and (3) economic and technical assumptions.11 The revenue loss 

estimates do not represent the amount of revenue that would be gained if a particular tax 

expenditure were repealed, since repeal of the expenditure would probably change taxpayer 

behavior in some way that would affect revenue.

 

11For more information on how Treasury and JCT estimate revenue loss, see appendix III of GAO-05-690; OMB, 

Analytical Perspectives, Budget of the United States Government, Fiscal Year 2013, (Washington, D.C.: 2012); and 

JCT, Estimates of Federal Tax Expenditures for Fiscal Years 2011-2015, JCS-1-12, (Washington, D.C.: Jan. 17, 2012).
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HOW THIS GUIDE WAS DEVELOPED

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To develop questions to consider when evaluating a tax expenditure, we brought together 

concepts and examples from a number of sources:

• Our previous work on results-oriented government, tax expenditures, tax reform, and

program evaluation.

• Illustrative examples of tax expenditures from our previous work.

• OMB publications, including the discussion in the President’s budget for fiscal year 2013 

and prior years of how to evaluate tax expenditures, earlier discussion of evaluating tax 

expenditures, and OMB’s guidance on the importance of rigorously evaluating federal 

programs.

• The experience of some state (Oregon and Washington) and foreign (Canada and 

Germany) governments that have made progress in evaluating their tax expenditures.

• Interviews with external experts in tax policy and program evaluation.

For more specific information on how we developed this guide, see appendix I. We conducted 

our work from May 2011 to November 2012 in accordance with all sections of GAO’s Quality 

Assurance Framework that are relevant to our objectives. The framework requires that we plan 

and perform the engagement to obtain sufficient and appropriate evidence to meet our stated 

objectives and to discuss any limitations in our work. We believe that the information and data 

obtained, and the analysis conducted, provide a reasonable basis for any findings and 

conclusions.
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HOW TO USE THIS GUIDE

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This guide identifies criteria and analytical questions for policymakers to consider in weighing 

competing priorities and evaluating the merits of a particular tax expenditure. The criteria and 

analytical questions can also help policymakers identify potential duplication, overlap, or 

fragmentation in federal mission areas and instill a more crosscutting and integrated approach 

to federal performance as envisioned by GPRAMA.12 The guide focuses on evaluating particular 

tax expenditures, which could be part of broader discussions of tax reform. For example, such 

evaluations could help inform debates about how to broaden the tax base by eliminating or 

scaling back some tax expenditures.13

There is not a “one size fits all” framework for evaluating tax expenditures. Reasonable 

judgment must be used in adapting the general questions and concepts we discuss in this guide 

to evaluating a particular tax expenditure. The guide does not address more technical issues, 

such as the data sources or specific research designs to use in evaluating a tax expenditure. 

Our other publications, such as our Designing Evaluations guide,14 provide more technical 

discussion and additional resources. 

 

12For more information on our work on opportunities to reduce duplication in federal programs, see GAO, 2012 

Annual Report: Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and 

Enhance Revenue, GAO-12-342SP (Washington, D.C.: Feb. 28, 2012) and Opportunities to Reduce Potential 

Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: 

Mar. 1, 2011).

13Tax reform discussions have raised concerns about how tax expenditures affect the fairness of the tax code, 

economy, and deficit. For example, see, National Commission on Fiscal Responsibility and Reform, Report of The 

National Commission on Fiscal Responsibility and Reform: The Moment of Truth (Washington, D.C.: 

December 2010).

14GAO, Designing Evaluations: 2012 Revision, GAO-12-208G (Washington, D.C., January 2012). 
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Tax expenditures have long been used as a tool for promoting social and economic objectives. 

While a framework for evaluating the results of outlay programs is well-established by nearly 2 

decades of experience implementing GPRA, less is known about the results of tax expenditures 

relative to their intended purposes. Understanding progress toward achieving intended 

purposes can facilitate comparisons to spending programs with similar purposes as well as 

broader evaluations of policy effectiveness. 

GPRA provides a useful framework for policy makers to use in considering whether federal 

programs achieve their goals by requiring that intended goals be explicitly stated and that 

progress towards them be measured and publically reported. As we have reported in the past, 

holding tax expenditures to similar requirements could help policymakers evaluate whether the 

government is achieving results or how the performance of tax expenditures interact with, or 

compare to, related spending programs.

Q What is the Tax Expenditure’s Intended Purpose? 

Under GPRA, a key first step of agencies’ performance measurement efforts is establishing 

strategic goals that explain the purposes of the agencies’ programs and the results they are 

intended to achieve.15 Likewise, identifying the tax expenditure’s purpose is a necessary first 

step in determining how the tax expenditure’s performance should be assessed. For some tax 

expenditures, the intended purpose may be clear from the legislative history; for others the 

purpose may not be clear and may need to be inferred. The Congressional Research Service 

(CRS) regularly compiles information on tax expenditures, including what is known about their 

purpose or purposes.16

• To encourage taxpayers to engage in particular activities. Some tax expenditures are 

geared toward encouraging investing in basic research; hiring; saving; or producing or 

purchasing energy efficient vehicles, housing, or appliances.

The following are various examples of broad purposes for tax 

expenditures. 

• To adjust for differences in individuals’ ability to pay taxes. Taxpayers who had large out-ofpocket medical expenses or theft losses may deduct some of these expenses.

• To adjust for other provisions of the tax code. Advocates of reduced rates on capital gains 

often explain the special treatment of capital gains income as offsetting, in part, the effect of 

inflation on the value of capital gains.

 

15GAO, Executive Guide: Effectively Implementing the Government Performance and Results Act, GAO/GGD-96-118 

(Washington, D.C.: June 1996).

16U.S. Congress, Senate Committee on the Budget, Tax Expenditures: Compendium of Background Material on 

Individual Provisions, S. Prt. 111-58. Prepared by CRS (Washington, D.C.: December 2010). 
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• To simplify tax administration. The provision that generally allows taxpayers to exclude from 

their income part or all of the capital gains from the sale of a principal residence may simplify 

income tax administration.

An example of a tax expenditure that may have multiple purposes is the mortgage interest 

deduction. According to CRS, the mortgage interest deduction dates back to a time when all 

interest payments were deductible and home mortgages were less prevalent, but it is now 

justified as encouraging homeownership and residential construction. In our 2005 report on tax 

expenditures, we noted that various justifications have been offered for the mortgage interest 

deduction, including encouraging home ownership, stimulating residential construction and 

maintenance, and encouraging families to save and invest in a major financial asset.17

Q Have Performance Measures Been Established to Monitor Success 

in Achieving the Tax Expenditure’s Intended Purpose? 

Performance measurement is the ongoing monitoring and reporting of program 

accomplishments, particularly progress toward preestablished goals. It focuses on measureable 

performance standards. Performance measures may address the type or level of program 

activities conducted (process), the direct products and services delivered by a program 

(outputs), or the results of those products and services (outcomes). A “program” may be any 

activity, project, function, or policy that has an identifiable purpose or set of objectives, including 

tax expenditures.18 Also, we have suggested previously that performance measures need to be 

responsive to multiple priorities.19

Performance measurement is typically conducted by program or agency management. As will 

be discussed further in the final section of this guide on how tax expenditure evaluations should 

be managed, it may not be clear which agency is the “manager” of a tax expenditure. The 

Internal Revenue Service (IRS) administers and supervises the execution and application of the 

internal revenue laws or related statutes, including tax expenditures. However, IRS is not 

responsible for managing federal housing, energy, or any of the many other policies to which tax 

expenditures may contribute.

For example, if a tax expenditure has multiple goals, then 

performance measures should recognize these different priorities.

 

17GAO-05-690. 

18GAO, Performance Measurement and Evaluation: Definitions and Relationships (Supersedes GAO-05-739SP), 

GAO-11-646SP (Washington, D.C.: May 2, 2011). We have also identified characteristics of successful performance 

measures. See GAO, Agencies Annual Performance Plans Under the Results Act: An Assessment Guide to Facilitate 

Congressional Decisionmaking, GAO/GGD/AIMD-10.1.18 (Washington, D.C.: February 1998).

19GAO/GGD/AIMD-10.1.18. 
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Q Does the Tax Expenditure Succeed in Achieving Its Intended 

Purpose?

Performance measures can provide some information about whether a program, including a tax 

expenditure, has achieved its intended purpose. Such performance measurement, because of 

its ongoing nature, can serve as an early warning system to program management and as a 

vehicle for improving performance and accountability to the public. Information about the extent 

to which an intended purpose is being met can also contribute towards broader evaluations, 

discussed in the following section, of how well a program is working and actions that could be 

taken to improve results.
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SECTION 2: EVEN IF ITS PURPOSE IS ACHIEVED, IS THE TAX EXPENDITURE GOOD POLICY?

Even if a tax expenditure succeeds in achieving its intended purpose, broader questions can be 

asked about effects beyond that purpose. In our publication, Understanding the Tax Reform 

Debate,

20

Q

we described how several long-standing criteria—economic efficiency, equity, 

simplicity, transparency, and administrability—can be used to evaluate tax policy. The same 

criteria can be applied to tax expenditures. The criteria may sometimes conflict with one another 

and some are subjective. As a result, there are likely trade-offs between the criteria when 

evaluating a particular tax expenditure.

Does the Tax Expenditure Generate Net Benefits In the Form of 

Efficiency Gains for Society as a Whole?

Resources are used most efficiently when they provide the greatest possible benefit or wellbeing. Specifically, an economy is efficient if its resources, including peoples’ time, capital 

goods, and natural resources, are used to produce the combination of leisure, consumer goods, 

health, environmental quality, and so on that gives the most benefit to society. The concept of 

economic efficiency recognizes that when resources are not underemployed, decisions about 

their use involve tradeoffs. Getting more of something means giving up something else. Often, 

private markets can produce outcomes that are considered economically efficient. Self interest 

is assumed to motivate buyers and sellers to ensure that resources are used where they 

produce the greatest value. On the other hand, private markets can produce inefficient 

outcomes when market prices do not reflect the true costs and benefits of the goods produced 

and resources used.

A shift of resources from one use to another would improve efficiency if the benefits forgone by 

giving up the former use are outweighed by the benefits gained from the new use; in other 

words, the shift produces a net gain in benefits. A gain in economic efficiency means that our 

average standard of living is higher. Conversely, when shifting or failing to shift resources 

reduces net benefits, the economy is less efficient than it could be. Economists refer to these 

inefficiencies as “deadweight losses” because they represent opportunities for a net gain that 

are left unexploited.21

Q What Is the Benefit to Society of the Activity the Tax Expenditure Encourages?

Tax expenditures that provide incentives may produce economic benefits if they reduce 

inefficiencies that would otherwise exist. Spillovers, or what economists call externalities, are a 

case of such inefficiencies. A tax expenditure can generate efficiency benefits if it changes 

 

20GAO, Understanding the Tax Reform Debate: Background, Criteria & Questions, GAO-05-1009SP (Washington, 

D.C.: September 2005). These criteria are also applicable to analyzing other government programs, such as 

spending programs or regulations.

21For a fuller discussion of economic efficiency and deadweight loss, see GAO-05-1009SP. 
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SECTION 2: EVEN IF ITS PURPOSE IS ACHIEVED, IS THE TAX EXPENDITURE GOOD POLICY?

incentives in a way that reduces spillover costs or increases activities that produce spillover 

benefits. Pollution is an example. Because polluters do not bear the full costs of the pollution 

they produce, the polluting activity may be over produced in a private market, as shown in the 

text box below. Consequently, a shift in resources away from the polluting activity could produce 

a net gain to society. Tax expenditures, like credits for production of renewable energy or 

energy efficient housing, have been designed to shift resources towards energy efficiency 

investment.

Hypothetical Example of How a Spillover Can Result in Economic Inefficiency

Suppose the following scenario involving a business that makes a product.

• Business’s production costs: $75.

• Product’s market price: $100.

• Pollution costs to society from production: $50.

All else equal, the business will choose to make the product because the market price exceeds the production 

costs. However, the total costs to society, which include the production and pollution costs, exceed the market 

price, or the value to society. As such, the business’s decision is economically inefficient, from society’s 

perspective. The business is using up resources with a total value of $125 to produce something valued at $100.

An example of spillover benefits is when businesses investing in research and development 

produce knowledge that enters the public realm and is freely available to others. In this case, 

the research provides benefits, or positive externalities, to other people who are unrelated to the 

investors. Economists widely agree that some government subsidy for basic research, such as 

the research tax credit, may be justified because the social returns from research exceed the 

private returns that investors receive. In the absence of a subsidy, the amount invested in 

research would be less efficient from society’s standpoint.

Q Do Any Performance Measures Established for the Tax Expenditure Measure 

These Benefits to Society?

The benefits to society described earlier can be difficult to measure on an ongoing basis. For 

example, increased investment in energy efficient equipment does not measure the value that 

society places on reduced pollution. Likewise, increased research spending does not measure 

the spillover benefits from the additional research. Estimating such benefits may require using a 

broader range of information than is feasible to monitor continuously with performance 

measures.

Another challenge can be measuring whether a tax expenditure actually changes behavior. If 

the tax expenditure has no effect on taxpayer behavior, the taxpayer gets a windfall—tax 

savings for activity that would have been done without the tax expenditure. In such a 

circumstance, no efficiency gain to society is possible because resources are not reallocated. 
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For the regular research credit, we estimated in 2009 that more than half the amount claimed by 

taxpayers was a windfall.22

The Research Tax Credit and Windfalls

The credit is an incremental subsidy in that taxpayers earn the credit only for qualified spending that exceeds a 

defined threshold, known as the base spending amount. The credit’s design is most cost-effective when the base 

spending amount accurately reflects the amount a taxpayer would have spent in absence of the credit. The figure 

below compares the effects of a hypothetical incremental credit with a perfectly accurate base to a flat credit, which 

has no base spending amount. The flat credit gives the taxpayer 20 cents for every research dollar spent while the 

incremental credit gives 20 percent for only the amount above what the taxpayer would have spent anyway.

A Comparison of an Incremental Credit with a Flat Credit

Both types of tax credit provide the same 20 percent reward for each additional dollar of qualified spending. In each 

case, that incentive encourages the taxpayer to increase spending for research by $100. However, the flat credit is 

less cost-effective for the government because it also gives the taxpayer a $200 windfall for conducting research 

that would have been done anyway.

The difficulty in designing a cost-effective incremental credit is computing the base spending amount. The base 

should represent what the taxpayer would have spent anyway (in the absence of the credit) but it is very difficult to 

design rules to measure that.

 

22We suggested Congress consider making changes to the credit to reduce excessive revenue costs and economic 

inefficiencies. As of November 2012, Congress has not made any changes to the credit. For more information, see 

GAO, Tax Policy: The Research Tax Credit’s Design and Administration Can Be Improved, GAO-10-136. 

(Washington, D.C.: Nov. 6, 2009). 
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SECTION 2: EVEN IF ITS PURPOSE IS ACHIEVED, IS THE TAX EXPENDITURE GOOD POLICY?

Q What Are the Costs of the Resources Used to Generate the Tax Expenditure’s 

Benefits?

The costs of the tax expenditure include the resources devoted to the subsidized activity and 

any associated administrative and compliance costs. The resource cost of the tax expenditure 

is, in part, the value of these resources had they been used in other activities. These costs are 

opportunity costs in the sense that they represent the value of lost product or output (and the 

corresponding lost income and consumption opportunities) due to the shift of resources. Other 

resource costs include any administrative and compliance costs, which will be discussed in 

more detail later in this guide.

Q Do the Benefits of the Tax Expenditure Exceed Its Costs?

A tax expenditure makes society better off, in an efficiency sense, if its benefits exceed its costs. 

In applying this rule, there are complications to consider. First, as already noted, is that costs 

should be comprehensive, including administrative and compliance costs. Second is that 

reasonable alternatives must be examined. Even in cases where benefits exceed costs, a 

particular tax expenditure may not be the best solution. 

Another complication relates to the economic effect of the higher tax rates that result from a 

narrower tax base. Holding debt constant, tax expenditures require a higher tax rate to raise the 

same amount of revenue. In general, higher tax rates distort economic decision making, 

resulting in efficiency costs. For example, OMB guidance23 suggests using a rule of thumb—the 

efficiency cost of a tax increase is equal to 25 percent of the incremental tax revenue.24

According to OMB, this additional efficiency cost from higher tax rates should be included in 

total costs of a program when comparing benefits to costs. We discussed these costs in more 

detail in our Understanding the Tax Reform Debate publication.25

 

23OMB, Circular A-94 (Washington, D.C.: 1992).

24A rule of thumb is useful because the efficiency costs of individual tax expenditures and their offsetting revenue 

increases are difficult to estimate. However, the efficiency costs from rate increases are not likely to be the same in 

all circumstances. For example, the revenue loss from accelerated depreciation could be offset by an increase in the 

corporate tax rate. To the extent that the revenue from an increase in the corporate tax rate would, particularly in the 

short term, stem from increased taxes on already existing corporate assets, the corporate tax rate increase would 

have a limited effect on incentives to invest and in this regard not add to efficiency costs. 

25GAO-05-1009SP. 
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Q Is the Tax Expenditure Fair or Equitable?

Equity is a subjective criterion. There are differing views on what an equitable tax system should 

look like, which can affect judgments on the fairness of a particular tax expenditure. Determining 

who benefits from the tax expenditure, and how those benefits affect equity, can be more 

complicated than simply identifying which taxpayers claim the tax expenditure. However, there 

are several questions that can inform judgments about the fairness of the tax expenditure.

Q Does the Tax Expenditure Result in Different Benefits for Similarly Situated 

Taxpayers?

One view on equity holds that taxpayers who have similar abilities to pay taxes should receive 

similar tax treatment. Tax expenditures can affect the equity of the tax system because they 

may favor certain types of economic behavior over others by taxpayers with similar financial 

conditions. For example, two taxpayers with the same income, net worth, and identical houses 

may be taxed differently if one owns his or her house and the other rents, because mortgage 

interest on owner-occupied housing is tax deductible.

Q Do Taxpayers With Different Abilities to Pay Receive Different Benefits From 

the Tax Expenditure?

Subjective judgments about equity are reflected in debates about the overall fairness of tax rate 

structures. These judgments, reflecting the view that people with different ability to pay should 

pay different rates or percentages of their income in taxes, are often based on how progressive 

the tax system is. Although the statutory rate structure of the tax system is progressive—tax 

liability as a percentage of income increases as income increases—some tax expenditures may 

affect progressivity because of their relationship to income. Depending on their design, tax 

deductions can be more valuable, in terms of the dollar value of the reduction in tax liability, to 

taxpayers in higher tax brackets. However, these deductions’ effect on progressivity is less 

certain because the effect on effective tax rates depends on the deduction’s share of a 

taxpayer’s income.26

 

26If the deduction represents a greater share of the income of lower income taxpayers, the tax rate reduction may be 

greater for these taxpayers then for taxpayers with larger incomes. In this case, the deduction could increase 

progressivity.

Other effects on the distribution of benefits include those due to tax credits 

that only provide a benefit to taxpayers who otherwise have a tax liability (unless the credits are 

refundable). Similarly, reducing or disallowing tax expenditure benefits with ceilings or other 

limits for higher income taxpayers can affect progressivity. For example, progressivity may be 

increased when credits and deductions designed to help taxpayers pay for college are reduced 

or unavailable for taxpayers above certain income levels. Whether this is fair and appropriate is 

a subjective judgment. However, analytical tools such as distributional analysis, which shows 
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tax burden by differing income groups, can be used to measure how the tax expenditure affects 

taxpayers with varying ability to pay and inform judgments about fairness. Like any analysis, a 

distributional analysis can be influenced by assumptions such as the analysis’s time horizon 

(1 year or longer), the incidence of the tax (who ultimately bears the burden of the tax), and how 

income is defined (e.g., are employer-provided fringe benefits included).27

Q Who Actually Benefits From the Tax Expenditure?

A tax expenditure intended to benefit a particular activity, industry, or class of people may wind 

up benefiting others not targeted by the tax expenditure by changing prices and incomes. For 

example, one rationale for the mortgage interest deduction is that it encourages home 

ownership. To the extent that the deduction is effective, it increases housing demand, which 

may raise the price of housing. Today’s homeowners purchased their houses at prices that 

reflected the existence of the mortgage interest deduction. The benefit of the tax expenditure is 

said to be capitalized in this higher price of housing, particularly in the short term.28

Q

Depending 

on how much the deduction increases housing demand, some of the benefits of the tax 

expenditure will flow in the form of higher prices and incomes to other parties such as home 

builders, mortgage lenders, and real estate agents.

Is the Tax Expenditure Simple, Transparent, and Administrable?

Simplicity, transparency, and administrability are desirable features of a tax system and a tax 

expenditure. As we have previously reported, there is considerable overlap between these three 

concepts, but they are not identical.29

Q What Are Planning, Recordkeeping, Reporting, and Other Compliance Costs 

for Taxpayers in Using the Tax Expenditure?

Simple tax expenditures can impose less compliance burden on taxpayers in terms of the need 

to learn about requirements, plan, keep records, prepare and file tax returns, and respond to 

IRS notices and audits, than complex tax expenditures. Compliance burden represents a cost to 

 

27See GAO-05-1009SP for more discussion of distributional analyses. 

28The extent to which the deduction is capitalized also depends on how responsive the supply of housing is to 

increases in its price. If housing supply is very responsive, at least in the long run, the price increase from the 

mortgage interest deduction could be mitigated or even eliminated. 

29GAO-05-1009SP. 
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society because it drains resources from other uses solely for the purpose of complying with the 

tax code. One potential effect of increased compliance burden is that fewer taxpayers claim the 

tax expenditure. For example, we found that complex rules and the time needed to claim the 

small employer health insurance tax credit may have discouraged its use.30

Q

Some tax 

expenditures may reduce the compliance burden for taxpayers. For example, parking expenses 

paid for by employers are excluded from an employee’s taxable income, up to a certain amount.

Determining the fair market value of this fringe benefit might be difficult for some taxpayers.

Can Taxpayers Understand How the Tax Expenditure Works?

A transparent tax expenditure is one for which taxpayers can easily calculate how their tax 

liabilities will be affected, understand lawmakers’ reasoning, and be aware of the extent to which 

others comply with its requirements. Transparency can allow taxpayers to more accurately 

predict their future tax liabilities and contribute to confidence in the fairness of the tax system. 

Tax expenditures that are not transparent can present challenges for taxpayers. For example, 

we found that families paying for college did not always select from the multiple higher 

education tax expenditures in a way that maximized their potential benefits, possibly because 

they were unaware of their eligibility or were confused about how to use the available tax credits 

and deductions.31

Q

On the other hand, as discussed earlier, tax expenditures as a policy tool 

tend not to be transparent in that they can mask the true size of federal spending in a given 

mission area and are generally not subjected to systematic performance measurement.

What Are the Costs to IRS and Third Parties in Administering the Tax 

Expenditure?

IRS incurs costs through processing tax returns, ensuring that only eligible taxpayers receive 

tax benefits, and providing assistance to taxpayers in claiming these benefits. In addition, for 

some tax expenditures, other government agencies incur costs.32

 

30GAO, Small Employer Health Tax Credit: Factors Contributing to Low Use and Complexity, 

Third parties, such as banks 

or employers, can incur costs if required to track and submit to IRS information on taxpayers’ 

income and transactions. We previously reported that certain activities may be cheaper and 

GAO-12-549 

(Washington, D.C.: May 14, 2012).

31GAO, Higher Education: Improved Tax Information Could Help Families Pay for College, GAO-12-560 (Washington, 

D.C.: May 18, 2012).

32For example, the Department of Labor and state agencies assist IRS in administering the work opportunity tax 

credit, which allows employers to claim credits for hiring workers from certain disadvantaged groups. In addition, we 

have reported that the administration of many community development tax expenditures involves other federal 

agencies as well as state and local governments. For example, the National Park Service oversees preservation 

standards for the 20 percent historic rehabilitation tax credit. For more information, see GAO, Community 

Development: Limited Information on the Use and Effectiveness of Tax Expenditures Could Be Mitigated through 

Congressional Attention, GAO-12-262 (Washington, D.C.: Feb. 29, 2012).
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simpler to administer through the tax code.33 For example, the incremental administrative and 

compliance costs to deliver the credit for child and dependent care expenses may be relatively 

low compared to the costs of setting up a separate system for processing child care applications 

and sending vouchers to those eligible. Other tax expenditures might reduce such 

administration costs. For example, the provision that generally allows taxpayers to exclude from 

their income part or all of the capital gains from the sale of a principal residence may simplify 

income tax administration.

 

33GAO-05-690. 
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SECTION 3: HOW DOES THE TAX EXPENDITURE RELATE TO OTHER FEDERAL PROGRAMS?

Many tax expenditures exist alongside other federal programs that have similar goals. For 

example, many spending programs and tax expenditures seek to improve energy efficiency or 

provide financial assistance for higher education.34

Q Does the Tax Expenditure Contribute to a Designated CrossAgency Priority Goal?

GPRAMA requires OMB, in coordination with agencies, to select a limited number of long-term, 

outcome-oriented crosscutting priority goals for the federal government, 35 which the 

administration is calling cross-agency priority (CAP) goals. On an annual basis, OMB is to 

identify the federal agencies, organizations, program activities, tax expenditures, regulations, 

policies, and other activities that contribute to each goal, along with crosscutting performance 

measures and quarterly performance targets. GPRAMA also requires that OMB—with the 

agencies—develop a federal government performance plan defining the level of performance to 

be achieved toward the crosscutting goals.36 Concurrent with the President’s budget for fiscal 

year 2013, the administration announced 14 interim crosscutting federal priority goals in 

February 2012. Several of the goals specifically identify tax expenditures as contributing 

programs.37 OMB and agencies are required to consult with Congress when establishing or 

adjusting government-wide and agency goals, which can provide Congress with opportunities to 

encourage further incorporation of tax expenditures into the goals. Consultations also provide 

Congress an opportunity to better understand challenges confronting particular programs, such 

as any data limitations and methodological issues in measuring and assessing a tax 

expenditure’s performance.38

 

34GAO-12-560; GAO-12-342SP; GAO, Energy Conservation and Climate Change: Factors to Consider in the Design 

of the Nonbusiness Energy Property Credit, GAO-12-318 (Washington, D.C.: Apr. 2, 2012); and GAO-11-318SP. 

3531 U.S.C. § 1120(a)(1). OMB is to update or revise the goals at least every 4 years. The goals are to be published 

concurrently with the President’s Budget in the first full fiscal year following the commencement of the presidential 

term of office.

3631 U.S.C. § 1115(a).

37CAP goals that identified tax expenditures are: (1) veteran career readiness, (2) entrepreneurship and small 

business, (3) energy efficiency, and (4) job training. See, GAO, Managing for Results: GAO’s Work Related to the 

Interim Crosscutting Priority Goals under the GPRA Modernization Act, GAO-12-620R (Washington, D.C.: 

May 31, 2012). 

38GAO-12-621SP and GAO, Managing for Results: Opportunities for Congress to Address Government Performance 

Issues, GAO-12-215R (Washington, D.C.: Dec. 9, 2011). 
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SECTION 3: HOW DOES THE TAX EXPENDITURE RELATE TO OTHER FEDERAL PROGRAMS?

Q Does the Tax Expenditure Duplicate or Overlap with Another 

Federal Effort?

Tax expenditures, if well designed and effectively implemented, can be an effective tool to 

further federal goals. However, tax expenditures can contribute to mission fragmentation and 

program overlap, thus creating the potential for duplication. For example, in a recent report on 

federal assistance for higher education we analyzed seven large spending programs and eight 

large tax expenditure programs that provide such assistance. In another example, we found that 

the federal government supported domestic ethanol production through two duplicative tools: (1) 

a tax credit and (2) a renewable fuel standard.39 We determined that the tax credit was not 

needed because the fuel standard was at a level high enough to ensure that a market for 

domestic ethanol production existed. In other words, the tax credit was no longer necessary to 

stimulate additional ethanol production. As such, we suggested that Congress consider revising 

the tax credit or phasing it out. Congress let the credit expire at the end of 2011.40

Q

Coordinated 

reviews of tax expenditures with related federal spending programs—which are consistent with 

GPRAMA requirements—could help policymakers reduce overlap and inconsistencies and 

direct scarce resources to the most effective or least costly methods to deliver federal support.

Is the Tax Expenditure Being Coordinated with Other Federal 

Activities?

Achieving results for the nation increasingly requires that federal agencies work together to 

identify ways to deliver results more efficiently and in a way that is consistent with limited 

budgetary resources. For example, tax expenditures where administration is fragmented across 

multiple agencies, like those for the 23 community development tax expenditures we studied, 

may require coordination to identify the data needed to measure and assess use of the tax 

benefits and associated outcomes.41 Coordination would also be critical to determining costeffective means of collecting, analyzing, and reporting such data. GPRAMA established a 

framework for taking a more crosscutting and integrated approach to focusing on results and 

improving government performance. Likewise, to address the potential for overlap and 

fragmentation among federal programs, previously we have identified collaborative practices 

agencies should consider implementing in order to maximize the performance and results of 

federal programs that share common outcomes.42

 

39GAO, Biofuels: Potential Effects and Challenges of Required Increases in Production and Use,

These practices include defining common 

outcomes; agreeing on roles and responsibilities for collaborative efforts; establishing 

GAO-09-446 

(Washington, D.C.: Aug. 25, 2009). 

40GAO, Follow-up on 2011 Report: Status of Actions Taken to Reduce Duplication, Overlap, and Fragmentation, 

Save Tax Dollars, and Enhance Revenue, GAO-12-453SP (Washington, D.C.: Feb. 28, 2012).

41GAO-12-262. 

42GAO, Managing for Results: Key Considerations for Implementing Interagency Collaborative Mechanisms, 

GAO-12-1022 (Washington, D.C.: Sept. 27, 2012) and Results-Oriented Government: Practices That Can Help 

Enhance and Sustain Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).
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SECTION 3: HOW DOES THE TAX EXPENDITURE RELATE TO OTHER FEDERAL PROGRAMS?

compatible policies and procedures; and developing mechanisms to monitor, assess, and report 

on performance results. For example, the Department of Housing and Urban Development has 

collaborated with IRS to attempt to measure the use of Empowerment Zone/Renewal 

Community employment credits.43 For higher education tax expenditures, based on our 

recommendation, IRS and the Department of Education have agreed to collaborate to help 

ensure individuals who are eligible to claim a higher education tax expenditure are aware of 

their eligibility and the benefit they may receive.44

Q Would an Alternative to the Tax Expenditure More Effectively 

Achieve Its Intended Purpose?

There are different types of tax expenditures and they often have the same effects as spending 

programs. Therefore, there are usually choices for how to deliver the desired federal assistance.

Q Is a Different Tax Expenditure Design Preferable?

Tax policy discussions sometimes include proposals to convert one type of tax expenditure, 

such as a deduction, to another, such as a credit. The different types of tax expenditures—

exclusions, exemptions, deductions, credits, preferential rates, and deferrals—have different 

revenue, distribution, efficiency and other effects. For example:

• exclusions, exemptions, and deductions are worth more to taxpayers in higher tax brackets;

• itemized deductions cannot be claimed by taxpayers who take the standard deduction;

• exclusions may also reduce payroll taxes;

• credits can be made refundable; and

• deferrals shift the timing of payments.

Understanding such design differences may help policy makers select a type of tax expenditure 

that best accomplishes their goals.

 

43We noted that the Department of Housing and Urban Development and IRS efforts represent a step in the right 

direction for agency collaboration; however the two agencies have faced data challenges. For more information, see 

GAO-12-262. 

44GAO-12-560. 
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SECTION 3: HOW DOES THE TAX EXPENDITURE RELATE TO OTHER FEDERAL PROGRAMS?

Illustration of the Use of Two Different Types of Tax Expenditures to Achieve the Same Goal 

Both Canada and the United States offer tax subsidies for public transit use. 

 Canada uses a non-refundable credit for individuals who purchase public transit passes. 

 The United States uses an exclusion—the value of transit passes provided directly by employers can be 

excluded from employees’ income, subject to a monthly limit. 

These different tax expenditure designs most directly affect distribution, compliance burden, and administrative 

costs. 

 With Canada’s credit, the benefit does not change due to a taxpayer’s marginal tax rate (provided the 

taxpayer’s tax liability exceeds the value of the credit), while the effective value of the United States’ exclusion 

is greater for higher income individuals. 

 Canadians must file their tax returns to receive the benefit, which may increase the compliance burden for 

individual taxpayers, while U.S. employers provide transit passes to their employees, which may increase third 

parties’ administrative costs. 

Q Is A Spending or Other Non-tax Policy Tool Preferable to the Tax Expenditure?

As already noted, tax expenditures are often aimed at goals similar to spending programs, 

raising the question of whether a non-tax policy tool might be preferred. OMB has considered 

the advantages and disadvantages of various policy tools, including tax expenditures. 

Generally, OMB highlights diffperences across the tools in the ability to target benefits, 

government administrative costs, and the burden imposed on parties outside the government, 

as shown in table 2. 
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SECTION 3: HOW DOES THE TAX EXPENDITURE RELATE TO OTHER FEDERAL PROGRAMS?

Table 2: Potential Advantages and Disadvantages of Tax Expenditures Compared to Alternative Policy Tools

Policy tool Potential advantages Potential disadvantages 

Tax 

expenditure 

Benefits are widely available.

A benefit or incentive linked to income may be 

administered through IRS at a relatively low 

cost. 

May simplify the tax system’s operation, (e.g., 

a threshold for capital gains from the sale of a 

residence below which taxes are not 

assessed). 

The variety of tax expenditure types allows for 

flexibility.

Difficult to target those without an income tax 

filing requirement or low tax liabilities.

May add to the complexity of the tax system.

Generally do not enable the same degree of 

agency discretion as spending programs.

Spending 

program 

May be specifically designed for low income 

families that are not subject to income taxes.

Better suited to funding programs when direct 

provision by the federal government is 

warranted, such as the armed forces and 

justice system.

May receive more year-to-year oversight.

Provides flexibility for policy design.

May rely less on economic incentives and 

private market provisions, reducing efficiency for 

some goals.

May respond less rapidly to changing economic 

conditions. 

Regulation Applies directly and immediately to the 

regulated parties.

Public administrative costs may be low 

because they rely largely on voluntary 

compliance.

Regulations can be fine tuned by the 

Executive Branch without legislation.

Historically have relied on proscriptive measures 

rather than economic incentives, which can 

diminish economic efficiency.

May impose substantial compliance costs on 

regulated entities.

Since they generally do not affect directly 

outlays or receipts, may not receive as much 

oversight as spending programs.

Source: OMB.

Note: Analysis of Office of Management and Budget, Analytical Perspectives, Budget of the United States Government, Fiscal Year 

2013 (Washington, D.C.: 2012). 

In some cases, the tax expenditure may not be the most cost-effective way to achieve a policy 

goal. For example, we found that a grant may be more cost effective at encouraging 

investments in low-income communities than the New Markets Tax Credit.
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SECTION 3: HOW DOES THE TAX EXPENDITURE RELATE TO OTHER FEDERAL PROGRAMS?

The New Markets Tax Credit

Congress established the New Markets Tax Credit (NMTC) in 2000 to encourage investors to make investments in 

low-income communities that traditionally lack access to capital. However, we found that the complexity of NMTC 

appears to reduce the federal subsidy reaching low-income communities.

• Treasury awards tax credits to Community Development Entities (CDE).

• Investors then make investments in the CDEs and, in exchange, can claim tax credits on a portion of their 

investment.

• The CDEs, in turn, are required to invest substantially all of the proceeds they receive into qualified low-income 

community investments.

This complex structure reduces the federal subsidy in two ways. First, as we reported in 2010, when the demand for 

NMTCs was highest the tax credits sold for $0.75 to $0.80 per dollar, according to CDE representatives we 

interviewed. Therefore, the federal subsidy was reduced by 20 percent to 25 percent before any funds were made 

available to CDEs. Second, CDE and other third-party fees, such as asset management and legal fees, further 

reduced the subsidy.

These up-front reductions in the federal subsidy could be largely avoided in a grant program. One option would be 

for Congress to set aside a portion of funds to be used as grants and a portion to be used as tax credits under the 

current NMTC program to facilitate a comparison of the two. For more information, see, GAO, New Markets Tax 

Credit: The Credit Helps Fund a Variety of Projects in Low-Income Communities, but Could be Simplified, 

GAO-10-334 (Washington, D.C.: Jan. 29, 2010).

In other cases, a tax expenditure may be the most cost-effective way to achieve a goal. For 

example, the incremental administrative and compliance costs to deliver the tax credit for child 

and dependent care expenses may be relatively low compared to the costs of setting up a 

separate system for processing child care applications and sending vouchers to those eligible.45

 

45GAO-05-690. 
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SECTION 4: WHAT ARE THE CONSEQUENCES FOR THE FEDERAL BUDGET OF 

THE TAX EXPENDITURE?

As previously discussed, Treasury and JCT estimate revenue losses for each tax expenditure. 

However, these estimates are not intended to include the full effect on the federal budget of 

eliminating or creating a tax expenditure. A variety of potential responses by taxpayers and 

policy makers need to be considered to understand the full budgetary consequences.

Q Are There Budget Effects Not Captured by Treasury’s or the JCT’s 

Tax Expenditure Estimates?

Treasury and JCT both estimate revenue loss separately for each tax expenditure by comparing 

revenue raised under current law with the revenue that would have been raised if the tax 

expenditure provision did not exist, assuming that taxpayer behavior and spending provisions 

remain constant. However, because taxpayer behavior and spending provisions may not remain 

constant, Treasury’s and JCT’s revenue loss estimates do not necessarily represent the amount 

of revenue that would be gained if the particular tax expenditure were repealed.

Q Would Eliminating or Creating the Tax Expenditure Affect Revenue Loss 

Estimates for Other Tax Expenditures?

Eliminating or creating the tax expenditure could increase or decrease the tax revenues 

associated with other income tax provisions. For example, revenue losses from remaining 

exclusions, exemptions, and deductions could increase if eliminating the tax expenditure results 

in some taxpayers moving into a higher tax bracket because more of their income is subject to 

tax. At higher marginal tax rates, the forgone revenue from the remaining tax expenditures 

these taxpayers claim would be greater.

Q Would Eliminating or Creating the Tax Expenditure Affect Other Federal 

Taxes, Such as the Payroll Tax?

Eliminating or creating the tax expenditure could also affect the amount of revenue the 

government collects from payroll taxes. For example, some exclusions apply to both income 

and payroll taxes. Treasury estimated that the exclusion of employer contributions for medical 

insurance premiums and medical care reduced payroll tax receipts by approximately $105 

billion in fiscal year 2011. Eliminating this particular exclusion could result in increased payroll 

tax receipts.46

 

46OMB, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2013 (Washington, D.C.: 

2012).
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SECTION 4: WHAT ARE THE CONSEQUENCES FOR THE FEDERAL BUDGET OF 

THE TAX EXPENDITURE?

Q Would Eliminating or Creating the Tax Expenditure Change Taxpayer 

Behavior In Ways that Affect Revenue?

In some situations, taxpayers might be able to alter their behavior in ways that would offset 

some of the increase in tax liability associated with eliminating a tax expenditure. For example, 

when the consumer interest deduction was phased out gradually, beginning in 1987, some 

taxpayers shifted to tax-deductible home equity loans in lieu of other nondeductible consumer 

debt.47

Q

Likewise, if the preferential tax rates for capital gains were eliminated, some taxpayers 

might delay or accelerate selling assets, thereby affecting the amount or timing of revenue the 

government receives.

Would Eliminating or Creating the Tax Expenditure Affect the Amount the 

Government Spends on Other Programs?

Because tax expenditures are similar to spending programs, they can be substitutes for each 

other. If the tax expenditure is replaced by, or replaces, a mandatory spending program, there 

may be no net effect on the federal budget. If the tax expenditure is replaced by, or replaces, a 

discretionary spending program, the net effect depends on the relative size of the revenue loss 

from the tax expenditure and the appropriations for the spending program. Therefore, any 

conclusion about the overall effect of tax expenditures on the budget depends on the 

assumptions about whether a spending program would be substituted for the tax expenditure 

and whether this would be a mandatory or discretionary spending program. Also, tax credits 

may affect eligibility for federal spending programs.48

 

47Until the Tax Reform Act of 1986, taxpayers were allowed to deduct interest paid on borrowed funds. Deductable 

interest could include, for example, interest expenses from credit cards, school loans, and mortgages. For more 

information, see GAO, Tax Policy: Many Factors Contributed to the Growth in Home Equity Financing in the 1980s, 

GAO/GGD-93-63 (Washington, D.C., Mar. 25, 1993). 

48For example, a refund from the earned income tax credit may be considered income for purposes of determining 

eligibility for Temporary Assistance for Needy Families. However, since 2010, section 728 of the Tax Relief, 

Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Public Law 111–312, indicates that a tax 

refund should not be taken into account as income for purposes of determining eligibility for benefits or assistance 

under any federal programs and federally assisted programs. This provision expires December 31, 2012. 
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SECTION 4: WHAT ARE THE CONSEQUENCES FOR THE FEDERAL BUDGET OF 

THE TAX EXPENDITURE?

Q Are There Options for Limiting the Tax Expenditure’s Revenue 

Loss?

Some tax expenditures are similar in many ways to “direct spending” or mandatory programs 

(including entitlements). The amount of spending or revenue loss is not controlled directly by 

Congress and the President; the spending or revenue loss is determined by eligibility criteria 

and any “benefit” formula or tax rate. Congress can indirectly change the spending from an 

entitlement program by changing eligibility or benefit rules, or both. Similarly, the revenue loss 

from a tax expenditure is a function of its design. A tax expenditure typically reduces taxes for 

all qualified claimants, regardless of how many taxpayers claim the tax expenditure, how much 

they claim collectively, or how much federal revenue is reduced by these claims.49

Q Can the Aggregate Amount that Taxpayers Claim for the Tax Expenditure Be 

Capped?

One option to limit revenue losses is to set a maximum amount that can be claimed in 

aggregate for all taxpayers for a tax expenditure. For example, Congress has authorized a 

maximum amount of tax credits that can be allocated for the New Markets Tax Credit and the 

low income housing tax credit.50

Q

While a cap may limit revenue losses, it requires processes for 

allocating the tax benefits so the cap is not exceeded, which adds administrative complexity and 

cost for the government and taxpayers. Also, a cap may reduce the incentive for taxpayers to 

engage in an activity.

Can Taxpayers’ Eligibility for The Tax Expenditure Be Restricted?

Restricting eligibility for tax expenditures does not provide the same certainty of future revenue 

loss as capping the aggregate amount taxpayers can claim, since the number of taxpayers who 

will claim a particular tax expenditure and how much they will claim may not be known. 

However, we have reported on ways to restrict eligibility for tax expenditures that can limit 

revenue losses, as described in table 3. While these restrictions might limit the tax expenditure’s 

revenue loss, they may also add significant complexity for taxpayers.

 

49GAO-05-690. 

50See GAO, New Markets Tax Credit: The Credit Helps Fund a Variety of Projects in Low-Income Communities, but 

Could Be Simplified, GAO-10-334 (Washington, D.C.: Jan. 29, 2010) and Community Reinvestment Act: Challenges 

in Quantifying Its Effect on Low-Income Housing Tax Credit Investment, GAO-12-869R (Washington, D.C.: 

Aug. 28, 2012). 
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THE TAX EXPENDITURE?

Table 3: Options for Restricting Eligibility for a Tax Expenditure

Option Examples

• Impose a ceiling on the benefits that can be 

claimed by an individual

• The mortgage interest deduction for owner-occupied 

homes is limited to mortgages of $1.1 million.

• Phase out benefits as income rises • For the tuition and fees deduction, single filers whose 

adjusted gross income does not exceed $65,000 may 

deduct up to $4,000 per return. Single filers with an 

income of more than $65,000 but not exceeding $80,000 

may deduct up to $2,000. 

• Add a floor providing benefits only to 

taxpayers who spend above specified levels 

• Unreimbursed medical expenses must be greater than 

7.5 percent of adjusted gross income.

• Impose controls on groups of related tax 

expenditures

• Previously, itemized deductions have been limited for 

taxpayers with income above a certain threshold.

Source: GAO. 

Note: Options are discussed in GAO/GGD/AIMD-94-122 and GAO-12-560. 

Q For Eligible Taxpayers, Can The Value of the Tax Expenditure Be Reduced?

The dollar amount available to eligible taxpayers for a given tax expenditure could be reduced. 

For example, if the maximum amounts taxpayers could claim for the child tax credit were 

reduced, total tax revenue losses would decrease, all else equal. Reducing the dollar amount 

available for a tax expenditure may reduce the incentive for taxpayers to engage in the related 

activity or affect the desired adjustments for differences in individuals’ ability to pay taxes.
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SECTION 5: HOW SHOULD EVALUATION OF THE TAX EXPENDITURE BE MANAGED?

For years we have reported on the lack of transparency and accountability for tax expenditures 

in comparison to spending programs.51

Q

GPRAMA sets a framework that can help ensure that 

tax expenditures are evaluated more systematically.

What Agency or Agencies Should Evaluate the Tax Expenditure?

GPRAMA sets the expectation that agencies should consider tax expenditures in measuring 

and communicating progress in achieving their missions and goals. For a tax expenditure that is 

part of a CAP goal, the responsible agencies identified in the related performance plan may be 

the logical agencies responsible for evaluating the tax expenditure. For example, the tax credit 

and deduction for clean-fuel burning vehicles falls under the energy efficiency goal, for which 

the Department of Energy, Environmental Protection Agency, and Department of Transportation 

are listed among the responsible agencies. Other tax expenditures not part of a CAP goal may 

also have logical connections to agencies—OMB guidance directs agencies to identify tax 

expenditures that contribute to their agency goals.52

Q

For both CAP and agency goals, GPRAMA 

requires identification of an individual, known as a goal leader, responsible for coordinating 

efforts to achieve the goals. Although IRS is the federal agency responsible for administering 

the tax laws, including those for tax expenditures, it is not responsible for the program areas 

targeted by many tax expenditures. For tax expenditures without logical connections to program 

agencies, such as those with tax administration purposes like the exclusion from income of 

capital gains from the sale of a principal residence, Treasury may be the most appropriate 

agency to conduct an evaluation. For many tax expenditures, evaluations will likely require 

collaboration among agencies.

When Should the Tax Expenditure Be Evaluated?

GPRAMA contains some guidance for when agencies could gauge the contributions of tax 

expenditures in achieving CAP goals. For tax expenditures that are not part of CAP goals, there 

are various options for selecting when to conduct evaluations.

• Selecting on a judgmental basis. For example, Canada’s Department of Finance generally 

selects 1 or 2 tax expenditures per year to evaluate.53

 

51GAO-05-690 and GAO/GGD/AIMD-94-122. 

52OMB, Circular A-11 (Washington, D.C.: August 2012).

53In some years, Canada’s Department of Finance analyzes a tax policy issue instead of evaluating a specific tax 

expenditure. 
GAO-13-167SP: Guide for Evaluating Tax Expenditures

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SECTION 5: HOW SHOULD EVALUATION OF THE TAX EXPENDITURE BE MANAGED?

• Selecting based on established criteria. Examples of criteria from the state and foreign 

governments we reviewed included evaluating older tax expenditures first, grouping 

evaluations by policy focus or industry, and focusing on tax expenditures with the largest 

revenue losses.

• Evaluating a new tax expenditure before it is enacted. Policy makers would need to request 

the evaluation well before deciding whether to enact a new tax expenditure to allow for 

sufficient time to conduct the evaluation.

• Evaluating an existing tax expenditure before it is extended. Many tax expenditure 

provisions have set expiration dates; however, Congress has often extended these 

provisions.54

Q

Evaluations could be conducted before deciding on whether to extend an 

expiring tax expenditure provision. As with a new tax expenditure, policy makers would need 

to request the evaluation well before the expiration date to allow for sufficient time to 

conduct the evaluation.

What Data Are Needed to Evaluate the Tax Expenditure?

As with determining who should evaluate a tax expenditure, it is the responsible program 

agencies that should determine what data should be collected to evaluate tax expenditures 

relevant to their agency goals (or Treasury in the case of tax expenditures with tax administration 

purposes). Further, the data that agencies will need to evaluate a tax expenditure depends on the 

questions being asked about the tax expenditure. Data needed to determine if the tax expenditure 

is achieving its intended purpose may differ from data needed to evaluate broader issues, such as 

whether the tax expenditure generates net benefits for society. IRS collects some tax expenditure 

data reported on tax returns or other tax forms. However, to minimize its workload and the burden 

on taxpayers, IRS collects only the information needed to know the correct amount of taxes owed, 

unless it is legislatively mandated to collect additional information. As such, existing IRS data may 

not be sufficient for evaluating the efficiency, equity, and other effects of a tax expenditure. For 

example, for the Indian reservation depreciation tax expenditure, IRS did not require taxpayers to 

identify the reservation on which the depreciated property is located, preventing analysis that 

seeks to link investment to economic indicators on specific reservations.55 Without information on 

where the investment is located, little progress can be made in determining how effective the tax 

expenditure is in promoting economic development.

 

54GAO, Tax Policy: Factors For Evaluating Expiring Tax Provisions, GAO-12-760T (Washington, D.C.: June 8, 2012).

55GAO-08-731. 
GAO-13-167SP: Guide for Evaluating Tax Expenditures

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SECTION 5: HOW SHOULD EVALUATION OF THE TAX EXPENDITURE BE MANAGED?

IRS could be directed to collect more data that could be used to evaluate a given tax 

expenditure; however, such effort involves costs.56 For example, for the Indian depreciation 

deduction, we suggested Congress consider requiring IRS to collect additional information, but 

we noted that Congress would need to weigh the associated costs of collecting and analyzing 

the information as well as the effects on IRS’s other priorities.57 Regardless of what type of data 

is collected, agencies will need to plan sufficiently so the data collected are available in time to 

conduct an evaluation. For general information on collecting data for evaluations, see our 

Designing Evaluations guide.58

 

56Likewise if entities other than IRS are to use collected data, taxpayer confidentiality and privacy provisions must be 

considered. Our taxpayer privacy guide provides questions for Congress to consider when assessing whether to 

expand disclosure of tax information. GAO, Taxpayer Privacy: A Guide for Screening and Assessing Proposals to 

Disclose Confidential Tax Information to Specific Parties for Specific Purposes, GAO-12-231SP (Washington, D.C.: 

Dec. 14, 2011). 

57GAO-08-731. 

58GAO-12-208G. 
GAO-13-167SP: Guide for Evaluating Tax Expenditures

APPENDIX I: SCOPE AND METHODOLOGY

Page32

To consider how to develop evaluative questions for tax expenditures, we brought together 

concepts and examples from a number of sources.

1. Our previous work on tax expenditures, tax reform, results-oriented government, and 

program evaluation.

• Results-orientated government. The Government Performance and Results Act 

Modernization Act (GPRAMA) is part of long-standing efforts to improve the efficiency and 

effectiveness of federal programs.59 Since the 1990s, individual federal agencies have been 

required to: (1) define their missions and desired outcomes, (2) measure performance, and 

(3) use this performance information to identify performance gaps.60 GPRAMA enhances 

this framework by focusing on challenges that are not possible for any single agency to 

address alone, such as increasing energy efficiency and improving the coordination and 

delivery of job training services. It requires the Office of Management and Budget (OMB) 

and federal agencies to identify and assess how different federal efforts, including tax 

expenditures, are contributing to the achievement of the federal government’s goals.61

• Our previous work on tax expenditures. We have issued a number of reports on tax 

expenditures. In 2005 and 1994, we described the substantial federal commitment tax 

expenditures represent, but found that little progress had been made in regularly and 

systematically evaluating them.62 We have also evaluated the use of tax expenditures in 

achieving specific federal goals, such as helping students and families pay for higher 

education and in promoting community development.63 In June 2012, we testified on factors 

to consider when evaluating expiring tax provisions, the majority of which are tax 

expenditures.64

• Tax Reform. Our 2005 report, Understanding the Tax Reform Debate: Background, Criteria, 

& Questions,65

 

59Pub. L. No. 111-352, 124 Stat. 3866 (2011). GPRAMA amends the Government Performance and Results Act of 

1993, Pub. L. No. 103-62, 107 Stat. 285 (1993).

summarizes long standing criteria for evaluating tax policy. A good tax 

system should raise the amount of revenue the government needs at the lowest cost to 

60GAO, Executive Guide: Effectively Implementing the Government Performance and Results Act, GAO/GGD-96-118 

(Washington, D.C.: June 1, 1996). 

61GAO, Government Performance: GPRA Modernization Act Provides Opportunities to Help Address Fiscal, 

Performance, and Management Challenges, GAO-11-466T (Washington, D.C.: Mar. 16, 2011).

62GAO, Government Performance and Accountability: Tax Expenditures Represent a Substantial Federal 

Commitment and Need to Be Examined, GAO-05-690 (Washington, D.C.: Sep. 23, 2005) and Tax Policy: Tax 

Expenditures Deserve More Scrutiny, GAO/GGD/AIMD-94-122 (Washington, D.C.: June 3, 1994). 

63GAO, Higher Education: Improved Information Could Help Families Pay for College, GAO-12-560 (Washington, 

D.C.: May 18, 2012) and Community Development: Limited Information on the Use and Effectiveness of Tax 

Expenditures Could Be Mitigated through Congressional Attention, GAO-12-262 (Washington, D.C.: Feb. 29, 2012). 

Older reports we have issued on tax expenditures are listed on pp. 127-128 of GAO-05-690. 

64GAO, Tax Policy: Factors for Evaluating Expiring Tax Provisions, GAO-12-760T (Washington, D.C.: June 8, 2012). 

65GAO, Understanding the Tax Reform Debate: Background, Criteria & Questions, GAO-05-1009SP (Washington, 

D.C.: September 2005). 
GAO-13-167SP: Guide for Evaluating Tax Expenditures

APPENDIX I: SCOPE AND METHODOLOGY

Page33

society, balanced with other objectives, such as fairly distributing the burden of taxes. How a 

tax system is designed has important implications for the economy, the compliance burden 

of taxpayers, Internal Revenue Service’s ability to administer the tax system, and public 

perceptions of its fairness and legitimacy. These criteria can be used to develop evaluative 

questions about specific tax expenditures.

• Program evaluation. Two of our reports—Designing Evaluations and Performance 

Measurement and Evaluation: Definitions and Relationships—summarize our institutional 

knowledge of how to evaluate federal programs.66

2. Illustrative examples of tax expenditures from our previous work, which are cited throughout 

this guide.

Many tax expenditures can be viewed as 

spending channeled through the tax code. In evaluating a tax expenditure, policy makers 

should ask many of the same types of questions as they would ask about any other federal 

program.

3. OMB publications, including the discussion in the President’s budget for fiscal year 2013 

and prior years of how to evaluate tax expenditures, earlier discussion of evaluating tax 

expenditures, and OMB’s guidance on the importance of rigorously evaluating federal 

programs.67

4. The experience of several state and foreign governments that have made progress in 

evaluating their tax expenditures. We used two reports by the Center on Budget and Policy 

Priorities68 and the Organization for Economic Co-operation and Development69 to identify 

state (Oregon and Washington) and foreign governments (Canada and Germany)70

 

66GAO, Designing Evaluations: 2012 Revision, 

that 

have taken steps to systematically evaluate tax expenditures. We interviewed officials from 

these governments.

GAO-12-208G (Washington, D.C.: Jan. 31, 2012) and Performance 

Measurement and Evaluation: Definitions and Relationships, GAO-11-646SP (Washington, D.C.: May 2, 2011). 

67OMB, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2013, (Washington, D.C.: 

2012); Circular No. A-11: Preparation, Submission, and Execution of the Budget (Washington, D.C.: August 2012); 

Evaluating Programs for Efficacy and Cost-Efficiency, M-10-32, Memorandum for the Heads of Executive 

Departments and Agencies, (Washington, D.C.: Jul. 29, 2010); Increased Emphasis on Program Evaluations, M-10-

01, Memorandum for the Heads of Executive Departments and Agencies, (Washington, D.C.: Oct. 7, 2009); The 

Government Performance and Results Act: Report to the President and Congress from the Director of the Office of 

Management and Budget, (Washington, D.C.: May 1997); and Circular No. A-94 Revised: Guidelines and Discount 

Rates for Benefit-Cost Analysis of Federal Programs (Washington, D.C.: October 29, 1992).

68Center on Budget and Policy Priorities, Promoting State Budget Accountability Through Tax Expenditure Reporting, 

(Washington D.C.: May 2011). 

69Organization for Economic Co-operation and Development, Tax Expenditures in OECD Countries, (Paris, France: 

2010). 

70The reports also identify several other governments that have reportedly made progress in evaluating tax 

expenditures. We contacted audit officials in these governments, but they were not able to provide information in the 

timeframe for our report. 
GAO-13-167SP: Guide for Evaluating Tax Expenditures

APPENDIX I: SCOPE AND METHODOLOGY

Page34

5. We interviewed external experts in tax policy and program evaluation to discuss how 

evaluations could be done for tax expenditures. These included several academics who 

specialize in either tax policy or program evaluation. We also interviewed experts affiliated 

with the Congressional Research Service, Tax Policy Center, American Enterprise Institute, 

the Performance Institute, and several universities. We also asked several of the experts to 

review a draft of this guide.

We conducted our work from May 2011 to November 2012 in accordance with all sections of 

GAO’s Quality Assurance Framework that are relevant to our objectives. The framework 

requires that we plan and perform the engagement to obtain sufficient and appropriate evidence 

to meet our stated objectives and to discuss any limitations in our work. We believe that the 

information and data obtained, and the analysis conducted, provide a reasonable basis for any 

findings and conclusions.
GAO-13-167SP: Guide for Evaluating Tax Expenditures

APPENDIX II: GAO CONTACT AND STAFF ACKNOWLEDGMENTS

Page35

GAO Contact

James White, (202) 512-9110, whitej@gao.gov

Staff Acknowledgements

Staff members who made major contributions to this report include Jeff Arkin, Assistant Director; 

Judith Ambrose; Michael Brostek; Elizabeth Curda; Kevin Daly; Aimée Elivert; Lois Hanshaw; 

Susan Irving; Benjamin Licht; Robert Lunsford; Sarah McGrath; Donna Miller; Ed Nannenhorn; 

Michael O’Neill; Robert Robinson; Alan Rozzi; MaryLynn Sergent; Anne Stevens; and Jim 

Wozny.
GAO-13-167SP: Guide for Evaluating Tax Expenditures

RELATED GAO PRODUCTS

Page36

Tax Expenditures

Community Reinvestment Act: Challenges in Quantifying Its Effects on Low-Income Housing 

Tax Credit Investment. GAO-12-869R. Washington, D.C.: August 28, 2012.

Tax Policy: Factors For Evaluating Expiring Tax Provisions. GAO-12-760T. Washington, D.C.: 

June 8, 2012.

Higher Education: Improved Tax Information Could Help Families Pay for College. GAO-12-560. 

Washington, D.C.: May 18, 2012.

Small Employer Health Tax Credit: Factors Contributing to Low Use and Complexity. 

GAO-12-549. Washington, D.C.: May 14, 2012.

Community Development Financial Institutions and New Markets Tax Credit Programs in 

Metropolitan and Nonmetropolitan Areas. GAO-12-547R. Washington, D.C.: April 26, 2012.

Energy Conservation and Climate Change: Factors to Consider in the Design of the 

Nonbusiness Energy Property Credit. GAO-12-318. Washington, D.C.: April 2, 2012.

Community Development: Limited Information on the Use and Effectiveness of Tax 

Expenditures Could be Mitigated through Congressional Action. GAO-12-262. Washington, 

D.C.: February 29, 2012.

Revitalization Programs: Empowerment Zones, Enterprise Communities, and Renewal 

Communities. GAO-10-464R. Washington, D.C.: March 12, 2010.

New Markets Tax Credit: The Credit Helps Fund a Variety of Projects in Low-Income 

Communities, but Could be Simplified. GAO-10-334. Washington, D.C.: January 29, 2010.

Tax Policy: The Research Tax Credit’s Design and Administration Can Be Improved. 

GAO-10-136. Washington, D.C.: November 6, 2009.

Biofuels: Potential Effects and Challenges of Required Increases in Production and Use. 

GAO-09-446. Washington, D.C.: August 25, 2009.

Tax Expenditures: Available Data are Insufficient to Determine the Use and Impact of Indian 

Reservation Depreciation. GAO-08-731. Washington, D.C.: June 26, 2008.

Government Performance Accountability: Tax Expenditures Represent a Substantial Federal 

Commitment and Need to Be Reexamined. GAO-05-690. Washington, D.C.: September 23, 

2005.

Tax Policy: Tax Expenditures Deserve More Scrutiny. GAO/GGD/AIMD-94-122. Washington, 

D.C.: June 3, 1994.

Tax Policy: Many Factors Contributed to the Growth in Home Equity Financing in the 1980s. 

GAO/GGD-93-63. Washington, D.C., March 25, 1993.
GAO-13-167SP: Guide for Evaluating Tax Expenditures

RELATED GAO PRODUCTS

Page37

Results-oriented Government and Program Evaluation

Managing for Results: Key Considerations for Implementing Interagency Collaborative

Mechanisms. GAO-12-1022. Washington, D.C.: September 27, 2012.

Managing for Results: A Guide for Using the GPRA Modernization Act to Help Inform 

Congressional Decision Making. GAO-12-621SP. Washington, D.C.: June 15, 2012.

Managing for Results: GAO’s Work Related to the Interim Crosscutting Priority Goals under the 

GPRA Modernization Act. GAO-12-620R. Washington, D.C.: May 31, 2012.

Follow-up on 2011 Report: Status of Actions Taken to Reduce Duplication, Overlap, and 

Fragmentation, Save Tax Dollars, and Enhance Revenue. GAO-12-453SP. Washington, D.C.: 

February 28, 2012.

2012 Annual Report: Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve 

Savings, and Enhance Revenue. GAO-12-342SP. Washington, D.C.: February 28, 2012.

Designing Evaluations: 2012 Revision. GAO-12-208G. Washington, D.C., January 31, 2012.

Managing for Results: Opportunities for Congress to Address Government Performance Issues. 

GAO-12-215R. Washington, D.C.: December 9, 2011.

Performance Measurement and Evaluation: Definitions and Relationships (Supersedes 

GAO-05-739SP). GAO-11-646SP. Washington, D.C.: May 2, 2011.

Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and 

Enhance Revenue. GAO-11-318SP. Washington, D.C.: March 1, 2011.

Results-Oriented Government: Practices That Can Help Enhance and Sustain Collaboration 

among Federal Agencies. GAO-06-15. Washington, D.C.: October 21, 2005.

Agencies’ Annual Performance Plans Under the Results Act: An Assessment Guide to Facilitate 

Congressional Decisionmaking. GAO/GGD/AIMD-10.1.18. Washington, D.C.: February 1, 1998.

Executive Guide: Effectively Implementing the Government Performance and Results Act. 

GAO/GGD-96-118. Washington, D.C.: June 1, 1996.

Taxpayer Privacy and Tax Reform

Taxpayer Privacy: A Guide for Screening and Assessing Proposals to Disclose Confidential Tax 

Information to Specific Parties for Specific Purposes. GAO-12-231SP. Washington, D.C.: 

December 14, 2011.

Understanding the Tax Reform Debate: Background, Criteria, & Questions. GAO-05-1009SP. 

Washington, D.C.: September 1, 2005.

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