CORPORATE TAX 

EXPENDITURES

Information on 

Estimated Revenue 

Losses and Related 

Federal Spending 

Programs

Report to Congressional Requesters

March 2013

GAO-13-339

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-339, a report to 

congressional requesters

March 2013

CORPORATE TAX EXPENDITURES

Information on Estimated Revenue Losses and 

Related Federal Spending Programs

Why GAO Did This Study

Tax expenditures—special exemptions 

and exclusions, credits, deductions, 

deferrals, and preferential tax rates 

claimed by corporations, individuals, or 

both—support federal policy goals but 

result in revenue forgone by the federal 

government. Congress and the 

administration are reexamining tax 

expenditures used by corporations as 

part of corporate tax reform. GAO was 

asked to examine issues related to 

corporate tax expenditures. This 

report: (1) describes trends in the 

number of corporate tax expenditures 

and estimated corporate revenue 

losses since 1986; (2) describes the 

use of corporate tax expenditures in 

2011; and (3) compares the size of 

corporate tax expenditures to federal 

spending by budget function and, for 

tax expenditures used only by 

corporations, identifies spending 

programs with similar purposes.

To address these objectives, GAO 

analyzed Department of the Treasury 

estimates of tax expenditure revenue 

losses from 1986 to 2011 and Internal 

Revenue Service 2010 data and 

interviewed agency officials. GAO also 

reviewed the legislative history and 

relevant studies to determine the 

reported purpose of corporate-only tax 

expenditures, and searched federal 

program lists to identify federal 

spending programs that appear to 

share a reported specific purpose 

similar to corporate-only tax 

expenditures. The programs identified 

as related were not reviewed by the 

agencies responsible for the programs.

What GAO Recommends

GAO made no recommendations in 

this report. Treasury provided technical 

comments that were incorporated, as 

appropriate; IRS had no comments.

What GAO Found

Estimated tax revenue that the federal government forgoes resulting from 

corporate tax expenditures increased over the past few decades as did the total 

number of corporate tax expenditures. In 2011, the Department of the Treasury 

estimated 80 tax expenditures resulted in the government forgoing corporate tax 

revenue totaling more than $181 billion. Many of these tax expenditures are 

broadly available to both corporate and individual taxpayers. More than twothirds or 56 of the 80 tax expenditures used by corporations in 2011 were also 

used by individual taxpayers, such as other types of businesses not organized as 

corporations. Modifying any of these 56 tax expenditures as part of broader 

corporate tax reform would likely affect both corporate and individual taxpayers to 

some degree.

Estimated Federal Tax Revenue Losses for Corporate Tax Expenditures, 2011 

Note: Sum of estimated revenue losses does not include outlay effects or reductions in excise tax 

receipts. Tax expenditures may be available to corporate and individual taxpayers, including other 

types of business entities other than corporations. According to the Department of the Treasury’s 

estimates, some tax expenditures may be used by only corporate taxpayers and some by only 

individual taxpayers while other tax expenditures may be used by both corporate and individual 

taxpayers.

Corporate tax expenditures span a majority of federal mission areas, but their 

relative size differs across budget functions. The 80 corporate tax expenditures 

had estimated revenue losses in 12 of the 18 budget functions in 2011. Of the 

$181 billion in estimated corporate tax revenue losses, 81 percent was 

concentrated in the international affairs and housing and commerce budget 

functions, exceeding federal outlays in those budget functions. The 24 tax 

expenditures used only by corporations in 2011 provide support intended to 

encourage certain activities, such as energy production, or provide support for 

certain entity types, such as credit unions. A corporate tax expenditure may have 

multiple purposes: one narrowly focused on a specific activity or entity as well as 

broader or additional purposes pursuing national priorities or other activities. For 

example, 7 of the 24 corporate-only tax expenditures are aimed at encouraging 

or supporting specific energy sources and technologies, and these tax 

expenditures may also have broader national purposes such as promoting 

domestic energy production and energy security. In examining their narrowly 

focused reported purposes, one-third of the 24 corporate-only tax expenditures 

appear to share a similar purpose with at least one federal spending program.

View GAO-13-339. For more information, 

contact James R. White at (202) 512-9110 or 

whitej@gao.gov
Page i GAO-13-339 Corporate Tax Expenditures

Letter 1 

Background 4

Estimated Revenue Losses from Corporate Tax Expenditures and 

the Number of Corporate Tax Expenditures Have Increased 

Since 1986 8

More Than Two-Thirds of Corporate Tax Expenditures Are Also 

Used by Individuals 10

Corporate Tax Expenditures Span Many Budget Functions; OneThird of Corporate-Only Tax Expenditures Share a Similar 

Purpose with Federal Spending Programs 14

Agency Comments and Our Evaluation 17

Appendix I Objectives, Scope, and Methodology 19

Appendix II Fifty-Six Tax Expenditures with Estimated Corporate and 

Individual Revenue Losses Reported by Treasury, by 

Largest Estimated Corporate Revenue Losses, 2011 26

Appendix III Twenty-Four Tax Expenditures with Only Estimated 

Corporate Revenue Losses Reported by Treasury, by 

Largest Estimated Corporate Revenue Losses, 2011 30

Appendix IV Number of Corporate Taxpayer Recipients for CorporateOnly Tax Expenditures, 2010 32

Appendix V Reported Purpose Supporting a Specific Activity or Entity 

for 24 Corporate-Only Tax Expenditures 33

Appendix VI Federal Activities That Appear to Share a Similar Purpose 

to 24 Corporate-Only Tax Expenditures 34

Contents 
Page ii GAO-13-339 Corporate Tax Expenditures

Appendix VII GAO Contact and Staff Acknowledgments 37

Tables

Table 1: Seven Largest Corporate Tax Expenditures, 2011 11

Table 2: Numbers and Estimated Federal Revenue Losses Resulting 

from Corporate Tax Expenditures by Budget Function, 

2011 14

Figures

Figure 1: Comparison of Estimated Federal Tax Revenue Loss Due 

to Tax Expenditures for Corporations and Individuals 

Reported by Treasury, 1986 through 2011 9

Figure 2: Number of Corporate Tax Expenditures Reported by 

Treasury, 1986 through 2011 10

Figure 3: Estimated Federal Tax Revenue Losses Resulting from 

Corporate Tax Expenditures, 2011 12

Figure 4: Historical Basis for the Tax Exemption of Credit Union 

Income 16
Page iii GAO-13-339 Corporate Tax Expenditures

Abbreviations

CFDA Catalog of Federal Domestic Assistance

CBO Congressional Budget Office

CRS Congressional Research Service

GDP gross domestic product

GPRAMA Government Performance and Results Act Modernization 

Act of 2010 

IRS Internal Revenue Service

SOI Statistics of Income

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Page 1 GAO-13-339 Corporate Tax Expenditures

United States Government Accountability Office

Washington, DC 20548

March 18, 2013

The Honorable John Lewis

Ranking Member

Subcommittee on Oversight

Committee on Ways and Means

House of Representatives

The Honorable Lloyd Doggett

House of Representatives

Each year, the federal government makes a significant commitment to 

corporate income tax expenditures, which are reductions in the federal 

corporate income tax liability that result from special exemptions and 

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

preferential tax rates. Estimated corporate revenue losses represent the 

amount of revenue the federal government forgoes as a result of 

corporate tax expenditures. Tax expenditures play a central role in a 

number of Congress’s and the administration’s proposals for corporate 

tax reform. Discussion regarding corporate tax reform has involved 

modifying or repealing certain tax expenditures as a way to broaden the 

corporate tax base and using the resulting revenue gains to offset 

reduced revenue from lowering the corporate income tax rate. However, 

there is little agreement on how much corporate tax rates should be 

reduced; which tax expenditures should be repealed or modified to offset 

such a rate cut; and what, if any, changes would be made to the 

individual income tax system to account for other types of business 

organizations and individual taxpayers that claim the same tax 

expenditures as corporations.

Corporate tax expenditures cover a wide range of federal policy goals and 

may have one or more purposes that are also pursued by federal 

spending programs. As we recently reported, reassessments of tax 

expenditures benefit from understanding whether there are related 

spending programs.1

 

1 GAO, Tax Expenditures: Background and Evaluation Criteria and Questions, 

GAO-13-167SP (Washington, D.C.: Nov. 29, 2012).

 
 

Page 2 GAO-13-339 Corporate Tax Expenditures

You requested that we provide information describing corporate tax 

expenditures. Specifically, this report: (1) describes trends in the number 

of corporate tax expenditures and aggregate corporate revenue losses 

since 1986; (2) describes the use of corporate tax expenditures in 2011; 

and (3) compares the size of corporate tax expenditures to federal 

spending by budget function and, for tax expenditures used only by 

corporations, identifies spending programs with similar purposes.2

To identify how corporate tax expenditures have changed in terms of their 

numbers and aggregate revenue loss, we analyzed Department of the 

Treasury (Treasury) estimates for fiscal years 1986 through 2011. We 

aggregated estimated corporate and individual revenue losses and also 

identified the number of tax expenditures with only estimated corporate 

revenue losses, those with both corporate and individual revenue losses, 

and those with only individual revenue losses.3

To describe the use of corporate tax expenditures, including the number 

of taxpayers claiming corporate-only tax expenditures, we analyzed 

Treasury revenue loss estimates for 2011 for corporate and individual 

taxpayer groups.4

 

2

The functional classification system is a way of grouping budgetary resources so that all 

budget authority and outlays of on-budget and off-budget federal entities and tax 

expenditures can be presented according to the national needs being addressed. National 

needs are grouped in 18 broad areas to provide a coherent and comprehensive basis for 

analyzing and understanding the budget. See GAO, A Glossary of Terms Used in the 

Federal Budget Process, 

We defined corporate tax expenditures as those that 

Treasury reported had estimated revenue losses for corporations in 2011; 

we describe any tax expenditures that Treasury estimated lost only 

GAO-05-734SP (Washington, D.C.: Sept. 1, 2005). 

3

While sufficiently reliable as a gauge of general magnitude, summing revenue loss 

estimates does not take into account any interactions between tax expenditures. In 

addition, revenue loss estimates do not incorporate any behavioral responses and, thus, 

do not represent the revenue amount that would be gained if a specific tax expenditure 

was repealed. For further discussion on summing of tax expenditure estimates and 

examples, see 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).

4

Tax expenditures may be available to corporate and individual taxpayers, including other 

types of business entities other than corporations. Treasury estimates the portion of 

revenue losses associated with corporate or individual taxpayers for each tax expenditure 

in its list. According to Treasury’s estimates, some tax expenditures may be used by only 

corporate taxpayers and some by only individual taxpayers while other tax expenditures 

may be used by both corporate and individual taxpayers. 
 

Page 3 GAO-13-339 Corporate Tax Expenditures

corporate tax revenue in 2011 as corporate-only tax expenditures. We 

also obtained, where available, estimates from the Internal Revenue 

Service (IRS) Statistics of Income (SOI) 2010 corporate sample on the 

number of corporate taxpayers claiming certain tax expenditures. These 

were the most recent estimates available at the time of our work. 

Similarly, we obtained publicly available fiscal year 2010 data from IRS’s 

Tax Exempt and Government Entities division on certain corporate tax 

expenditures. To assess the reliability of the data and estimates, we 

reviewed agency documentation, interviewed agency officials, and 

reviewed our prior reports that have used the data and estimates. While 

we determined that the Treasury and IRS data and estimates were 

sufficiently reliable for our purposes, the IRS SOI corporate sample may 

not provide a precise estimate of the number of taxpayers claiming a tax 

expenditure when the number of taxpayers is very small.5

To compare corporate tax expenditures to federal spending by budget 

function, we summed the estimated revenue losses of corporate tax 

expenditures and compared them to federal outlays by budget function for 

2011. To identify spending programs with reported purposes similar to 

corporate-only tax expenditures in 2011, we first identified the reported 

purpose of those tax expenditures by reviewing their legislative histories, 

our prior work, as well as work by the Congressional Research Service 

(CRS) and the Congressional Budget Office (CBO) that discussed the tax 

expenditures. We reviewed these sources for any discussion on the intent 

or rationale of the tax expenditures. For this report, we identified a narrow 

reported purpose, specific to the type of entity or activity that the 

corporate-only tax expenditures support or target. In identifying the 

narrow reported purposes we were not trying to discern the legislative 

intent. The corporate-only tax expenditures may have broader or 

additional purposes beyond the narrow reported purposes we identified. 

We used the narrow reported purposes as they allowed us to identify the 

tax and nontax programs that appear to most closely support the activity 

or entity the corporate-only tax expenditures support. We then searched 

the 2012 Catalog of Federal Domestic Assistance (CFDA) to identify 

federal spending programs that appear to share a similar reported 

 

5

When the number of taxpayers claiming a tax expenditure is small, even with a large 

sample such as the IRS SOI corporate sample, estimates for small subpopulations like 

these often have large confidence intervals. For three of the corporate-only tax 

expenditures, the estimated number of corporations claiming the expenditure was less 

than 17. See appendix I for additional detail on the IRS SOI corporate sample.
 

Page 4 GAO-13-339 Corporate Tax Expenditures

purpose based on the CFDA’s program descriptions. Our list of nontax 

programs that appear to share a similar reported purpose has not been 

reviewed by the agencies responsible for them. We identified tax 

expenditures that appear to share a similar reported purpose by reviewing 

their descriptions in the fiscal year 2013 Analytical Perspectives, 

supplemented with the description in CRS’s 2010 tax expenditures 

compendium, and Treasury and IRS reviewed our identification of related 

tax expenditures.6

We conducted our work from October 2012 to March 2013 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 in this 

product.

See appendix I for more information on our scope and 

methodology.

Corporate tax expenditures are special tax provisions that are exceptions 

to the normal structure of the corporate income tax system.7 They 

represent revenue the federal government forgoes from these tax 

provisions. The Congressional Budget and Impoundment Control Act of 

1974 identified six types of tax provisions that are considered tax 

expenditures when they are exceptions to the normal tax structure, 

including exemptions, exclusions, deductions, credits, deferral, and 

preferential tax rates.8

 

6

Office of Management and Budget, Analytical Perspectives, Budget of the United States 

Government, Fiscal Year 2013, (Washington, D.C.: 2012) and U.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).

Treasury and the Joint Committee on Taxation 

7

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. For more detail on the 

normal structure of tax expenditures, see pg. 92 of 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).

8

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

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.

Background 
 

Page 5 GAO-13-339 Corporate Tax Expenditures

each compile an annual list of tax expenditures by budget function with 

estimates of the corporate and individual income tax revenue losses for 

each tax expenditure in their respective lists.9 Treasury and the Joint 

Committee on Taxation calculate separately the estimated revenue 

losses for each tax expenditure under the assumptions that all other tax 

expenditures remain in the tax code and taxpayer behavior remains 

constant.10

Corporate income tax expenditures are estimated for firms organized 

under the tax code as C corporations, which include most large, publicly 

held corporations, and have their profits taxed at the entity level under the 

corporate income tax system (filed on an IRS form 1120). Other types of 

businesses, such as partnerships and S corporations

Thus, the estimated revenue losses do not represent the 

amount of revenue that would be gained if a particular tax expenditure 

was repealed, since repeal would probably change taxpayer behavior in 

some way that would affect revenue.

11

 

9

Office of Management and Budget, 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).

, are referred to as 

“pass-through” entities because for tax purposes the income earned by 

these businesses is attributed to or passed through to the owners of the 

business and are in general taxed only once under the individual income 

tax system. Treasury and the Joint Committee on Taxation classify the 

10While, in general, the tax expenditure lists Treasury and the Joint Committee on 

Taxation publish annually are similar, they differ somewhat in the number of tax 

expenditures reported and the estimated revenue losses for particular expenditures 

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

which is the minimum revenue loss threshold for Treasury and the Joint Committee on 

Taxation to report a tax expenditure; and (3) economic and technical assumptions. For 

more information on how Treasury and the Joint Committee on Taxation estimate revenue 

loss, see appendix III of GAO-05-690. 

11S corporations are limited to no more than 100 shareholders and can only issue one 

class of stock. See CRS, Business Organizational Choices: Taxation and Response to 

Legislative Changes, (Washington, D.C.: Apr. 26, 2012).
 

Page 6 GAO-13-339 Corporate Tax Expenditures

estimated amounts of tax expenditures claimed (or used) by “passthrough” entities as individual income tax expenditures.12

The classification of a tax expenditure as corporate or individual, or both 

is based on the entity that claims or uses the particular tax provision or 

would report a type of income if it were not excluded from tax. This 

classification reflects what is referred to as the statutory incidence of the 

tax expenditure and shows which entities—corporations or individuals, or 

both—can directly reduce their tax liability because of the tax expenditure. 

However, as both Treasury and the Joint Committee on Taxation note, 

the benefits and outcomes from the tax expenditure may be intended to 

ultimately benefit people other than the direct recipients of the tax 

expenditure. To the extent that a tax expenditure leads to changes in the 

prices of particular goods or services, wages, or returns on investment, 

consumers, employees, or shareholders may see benefits that they 

otherwise would not have received. A classification based on ultimate 

beneficiaries would reflect what is known about the economic incidence of 

tax expenditures rather than the statutory incidence.13

Over the past decade, the number of corporate taxpayers has declined, 

partly because more businesses are organizing as “pass-through” entities 

than as C corporations. In tax year 2010, IRS reported that almost 1.7 

million active C corporations filed an IRS form 1120, down from 1.9 

For example, the 

credit for low-income housing investments, while claimed largely by 

corporate taxpayers, is intended to ultimately benefit individuals by 

stimulating the production of affordable rental housing and thereby 

enabling low-income households to obtain potentially higher quality 

housing for lower rent than they would have otherwise.

 

12Limited liability companies, business entities organized under state law, are treated 

under IRS default rules as partnerships or disregarded entities, depending on the number 

of members. If a limited liability company chooses not to be classified under the default 

classification, it can elect to be taxed as a C corporation or S corporation. Under the last 

option the company’s income and expenses are simply attributed to its parent corporation. 

See GAO, Business Tax Reform: Simplification and Increased Uniformity of Taxation 

Would Yield Benefits, GAO-06-1113T (Washington, D.C.: Sept. 20, 2006).

13See Tax Policy Center, How Big Are Total Individual Income Tax Expenditures, and 

Who Benefits from Them? Discussion Paper No. 31 (December 2008) and GAO, 

Understanding the Tax Reform Debate: Background, Criteria, & Questions,

GAO-05-1009SP (Washington, D.C.: Sept. 1, 2005).
 

Page 7 GAO-13-339 Corporate Tax Expenditures

million in tax year 2007 and 2.2 million in tax year 2000.14 Measured 

relative to the economy as a share of gross domestic product (GDP), 

corporate income tax receipts increased in the years leading up to the 

economic recession that began in December 2007. During this period 

they increased from 2.1 percent of GDP in 2000 to 2.7 percent of GDP in 

2007 and have since decreased to 1.2 percent of GDP in 2011.15

Both members of Congress and the administration have outlined potential 

frameworks and proposals for modifying and simplifying the corporate 

income tax system in recent years. A number of these proposals have 

involved modifying or repealing some corporate tax expenditures to 

broaden the corporate income tax base and using the resulting revenue 

offset to reduce corporate income tax rates. One notable challenge for 

broader corporate tax reform is the degree to which changes to tax 

expenditures affect other types of taxpayers claiming them as most 

corporate tax expenditures are also available to other types of business 

entities other than corporations.

In selecting activities to fund federal policy goals, Congress can choose to 

enact a tax expenditure rather than a spending program or vice versa for 

a variety of reasons. We have developed and highlighted criteria and 

questions for evaluating tax expenditures, including whether other policy 

tools, such as spending programs, are preferable to tax expenditures.16 In 

addition, we have long reported 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 a 

more systematic review of performance, including results.17

 

14See IRS SOI, Corporation Complete Report. This data includes active corporations that 

filed a return on forms 1120, 1120-A (until 2006), 1120-F, 1120-L, and 1120-PC but not 

forms 1120S, 1120-REIT, and 1120- RIC.

More 

recently, the Government Performance and Results Act (GPRA) 

15Trends in the number of and estimated revenue losses for corporate tax expenditures 

are discussed later in this report.

16GAO, Tax Expenditures: Background and Evaluation Criteria and Questions, 

GAO-13-167SP (Washington, D.C.: Nov. 29, 2012). 

17GAO, 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).
 

Page 8 GAO-13-339 Corporate Tax Expenditures

Modernization Act of 2010 (GPRAMA)18 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 the Office of Management and 

Budget, in coordination with federal agencies, is to identify, among other 

things, the various federal agencies, program activities, and tax 

expenditures that contribute to the federal government’s performance 

plan that defines the level of performance to be achieved toward 

crosscutting priority goals. These crosscutting priority goals cover a 

limited number of policy areas as well as goals to improve management 

across the federal government. Moving forward, GPRAMA 

implementation can help inform tough choices in setting priorities as 

policymakers address the rapidly building fiscal pressures facing our 

national government.19

Estimated revenue losses from corporate tax expenditures have 

increased over the last few decades in constant dollars, as shown in 

figure 1. After decreasing in the years following the Tax Reform Act of 

1986, due to changes to both tax rates and tax expenditures, corporate 

revenue losses increased thereafter. Individual revenue losses also 

increased, although at a faster pace than corporate revenue losses.

 

18Pub. L. No. 111-352, 124 Stat. 3866 (Jan. 4, 2011).

19GAO, Managing for Results: Opportunities for Congress to Address Government 

Performance Issues, GAO-12-215R (Washington, D.C.: Dec. 9, 2011) and Managing for 

Results: GPRA Modernization Act Implementation Provides Important Opportunities to 

Address Government Challenges, GAO-11-617T (Washington, D.C.: May 10, 2011).

Estimated Revenue 

Losses from 

Corporate Tax 

Expenditures and the 

Number of Corporate 

Tax Expenditures 

Have Increased Since 

1986 
 

Page 9 GAO-13-339 Corporate Tax Expenditures

Figure 1: Comparison of Estimated Federal Tax Revenue Loss Due to Tax Expenditures for Corporations and Individuals 

Reported by Treasury, 1986 through 2011

Note: Sum of estimated revenue losses does not include outlay effects or reductions in excise tax 

receipts.

From 1986 through 2011, the number of tax expenditures with estimated 

corporate revenue losses increased from 61 in 1986 to 80 in 2011, as 

shown in figure 2.20

 

20The number of tax expenditures reflects all provisions reported by Treasury, including 

those enacted but effective for future fiscal years. Some provisions listed by Treasury as 

one tax expenditure may actually include multiple tax provisions aggregated together. In 

addition, fluctuations in the trend lines from year-to-year may reflect changes in Treasury’s 

methodology rather than changes in tax law enacted.
 

Page 10 GAO-13-339 Corporate Tax Expenditures

Figure 2: Number of Corporate Tax Expenditures Reported by Treasury, 1986 through 2011

Note: Tax expenditures may be available to corporate and individual taxpayers, including other types 

of business entities other than corporations. According to Treasury’s estimates, some tax 

expenditures may be used by only corporate taxpayers and some by only individual taxpayers while 

other tax expenditures may be used by both corporate and individual taxpayers.

Estimated corporate revenue losses in 2011, which totaled $181.4 billion, 

were approximately the same size as the amount of corporate income tax 

revenue the federal government collected that year. Individual tax 

revenue losses totaled $891 billion in 2011, and included tax 

expenditures used by other types of business entities that pass through to 

individual taxpayers. According to Treasury’s 2011 estimates, 80 tax 

expenditures had corporate revenue losses. Of those, two expenditures 

accounted for 65 percent of all estimated corporate revenues losses in 

2011 while another five tax expenditures—each with at least $5 billion or 

more in estimated revenue loss for 2011—accounted for an additional 21 

percent of corporate revenue loss estimates. Table 1 shows the seven 

largest corporate tax expenditures in 2011.

More Than TwoThirds of Corporate 

Tax Expenditures Are 

Also Used by 

Individuals 
 

Page 11 GAO-13-339 Corporate Tax Expenditures

Table 1: Seven Largest Corporate Tax Expenditures, 2011

Tax expenditure

Federal revenue 

loss estimates 

resulting from 

corporations 

(dollars in billions) 

Share of total 

estimated 

corporate tax 

revenue losses

Accelerated depreciation of machinery and 

equipment

$76.1 a 42%

Deferral of income from controlled foreign 

corporations 

41.4 23

Deduction for US production activities 9.8 b 5 

Credit for increasing research activities 8.3 c 5 

Exclusion of interest on public purpose State 

and local bonds

7.6 d 4 

Deferred taxes for financial firms on certain 

income earned overseas

6.2 3 

Credit for low-income housing investments 5.8 e 3 

Total $155.3 86%

Source: GAO analysis of Office of Management and Budget budget data on tax expenditures, fiscal year 2013.

Note: Totals may not add due to rounding.

a

Also had estimated individual revenue losses of $42.4 billion in 2011.

b

Also had estimated individual revenue losses of about $3.3 billion in 2011.

c

Also had estimated individual revenue losses of $460 million in 2011.

d

Also had estimated individual revenue losses of about $18.6 billion in 2011.

e

A majority of corporate tax expenditures are not isolated to the corporate 

income tax system but also apply to other types of businesses, including 

“pass-through” entities. Of the 80 tax expenditures used by corporations, 

56 were also used by individuals, as shown in figure 3. Modifying any of 

these 56 tax expenditures as part of broader corporate tax reform would 

likely affect both corporate and individual taxpayers to some degree. 

However, the percentage of corporate taxpayers using these tax 

expenditures varies considerably across the 56 tax expenditures. For 

example, some tax expenditures are predominately used by corporations, 

such as the alcohol fuels credit, with estimated corporate revenue losses 

comprising 96 percent of the tax expenditure’s estimated $500 million 

Also had estimated individual revenue losses of $310 million in 2011. In addition, the credit for lowincome housing investments has outlay effects of nearly $3.5 billion in 2011.
 

Page 12 GAO-13-339 Corporate Tax Expenditures

income tax revenue loss in 2011.

21

Figure 3: Estimated Federal Tax Revenue Losses Resulting from Corporate Tax 

Expenditures, 2011

Others are used predominantly by 

individuals, such as the exclusion of utility conservation subsidies, where 

corporations account for less than 5 percent of the $220 million estimated 

revenue loss in 2011. See appendix II for more information on these 56 

tax expenditures’ estimated corporate revenue losses in 2011. 

Note: Sum of estimated revenue losses does not include outlay effects or reductions in excise tax 

receipts. Tax expenditures may be available to corporate and individual taxpayers, including other 

types of business entities other than corporations. According to Treasury’s estimates, some tax 

expenditures may be used by only corporate taxpayers and some by only individual taxpayers while 

other tax expenditures may be used by both corporate and individual taxpayers.

The remaining 24 tax expenditures had only estimated corporate revenue 

losses in 2011. Some tax expenditures are limited to C corporations 

based on requirements in the Internal Revenue Code, which is why they 

have only corporate revenue losses, while others may not be restricted to 

 

21In addition, the alcohol fuel mixture credit also results in a reduction in excise tax 

receipts of $6.52 billion in 2011 according to Treasury’s estimates.
 

Page 13 GAO-13-339 Corporate Tax Expenditures

C corporations but are only used by corporations in practice.22 Modifying 

only those tax expenditures used by corporations as part of corporate tax 

reform may limit the changes to tax expenditures claimed only by 

corporate taxpayers but would limit somewhat the degree to which the 

corporate tax base could be broadened to pay for a corporate tax rate cut. 

See appendix III for a list of corporate-only tax expenditures. The number 

of corporations claiming a particular corporate-only tax expenditure 

varies. For example, in 2010 almost 12,000 organizations claimed the tax 

exemption for certain insurance companies owned by tax-exempt 

organizations ($200 million in corporate tax revenue losses in 2011) while 

5 corporations claimed the credit for energy efficient appliances ($280 

million in corporate tax revenue losses in 2011).23 See appendix IV for the 

numbers of users for 11 corporate-only tax expenditures where data were 

available.

 

22According to Treasury officials, two of the corporate-only tax expenditures are limited to 

C corporations or those treated as C corporations by the Internal Revenue Code. These 

tax expenditures include the graduated corporation income tax rate, which applies only to 

corporations, and the credit for holders of zone academy bonds, which is available only to 

certain types of corporations investing in school construction. See 26 U.S.C. §§ 11, 54E, 

1397E. Four additional tax expenditures are restricted to corporations even though the 

recipients may not be organized as corporations. The Internal Revenue Code requires 

insurance companies to file as C corporations for federal corporate income tax purposes 

irrespective of their legal form of organization (sec. 7701(a)(3)).Treasury also assumes for 

two tax expenditures that all organizations claiming the tax expenditure would file their tax 

returns under the federal corporate income tax system if the tax expenditure was 

removed. The remaining 16 tax expenditures could be used by individuals and “passthrough” entities. Treasury estimated that these tax expenditures had 2011 revenue 

losses only for corporations or that the estimated individual revenue losses were less than 

Treasury’s de minimus reporting threshold of $5 million.

23For the number of recipients claiming tax expenditures, tax exemption data are fiscal 

year 2010 data while tax credit and deduction data is 2010 corporate tax year data. For 

corporate tax expenditures, the corporations may not be the sole or ultimate beneficiaries 

intended to benefit from the special tax treatment. For example, in addition to the 

manufacturers directly claiming the credit for energy efficient appliances, consumers 

would benefit from any increased supply and lower prices for energy efficient appliances. 
 

Page 14 GAO-13-339 Corporate Tax Expenditures

Corporate tax expenditures span a majority of federal mission areas, but 

their relative size differs across budget functions. The 80 corporate tax 

expenditures had estimated revenue losses in 12 of the 18 budget 

functions in 2011, as shown in table 2. Of the $181 billion in estimated 

corporate tax revenue losses, 81 percent was concentrated in the 

international affairs and housing and commerce budget functions. In 

these two budget functions, estimated corporate revenue losses were 

more than federal outlays.

Table 2: Numbers and Estimated Federal Revenue Losses Resulting from Corporate Tax Expenditures by Budget Function, 

2011

Budget function

Number of 

corporate tax 

expenditures 

Estimated corporate tax 

revenue losses

(dollars in billions)

Federal 

outlays (dollars in 

billions) a

Commerce and housing 16 $96.3 $(12.6)

International affairs

b

3 50.8 45.7 

General science, space, and technology 2 9.3 29.5 

General purpose fiscal assistance 1 7.6 7.5 

Energy 20 6.1 12.2 

Education, training, employment, and social services 10 4.0 101.2 

Health 5 2.8 372.5 

Community and regional development 8 1.8 23.8 

Natural resources and environment 8 1.5 45.5 

Income security 1 1.0 597.4 

Transportation 3 0.2 93.0 

Corporate Tax 

Expenditures Span 

Many Budget 

Functions; One-Third 

of Corporate-Only Tax 

Expenditures Share a 

Similar Purpose with 

Federal Spending 

Programs

Corporate Tax 

Expenditures Span Many 

Budget Functions, and 

Estimated Corporate 

Revenue Losses Are 

Concentrated in Two 

Budget Functions
 

Page 15 GAO-13-339 Corporate Tax Expenditures

Budget function

Number of 

corporate tax 

expenditures 

Estimated corporate tax 

revenue losses

(dollars in billions)

Federal 

outlays (dollars in 

billions) a

Agriculture 3 0.04 20.7 

Total 80 $181.4 $1,336.2 c

Source: GAO analysis of Office of Management and Budget budget data on tax expenditures and federal outlays, fiscal year 2013. 

Notes: Budget functions are sorted by estimated corporate revenue losses. The national defense, 

social security, veterans benefits and services, and net interest budget functions had no corporate tax 

expenditures. While Treasury classifies each of the tax expenditures it lists under a particular budget 

function, some tax expenditures, such as those in the commerce and housing budget function may be 

claimed by various industries and potentially cut across multiple budget functions.

a

The sum of estimated revenue losses does not include outlay effects or reductions in excise tax 

receipts. Outlay-equivalent estimates—the amount of outlays required to deliver the same after-tax 

income as provided through the tax expenditure—may provide for a more appropriate comparison to 

federal spending than estimated revenue losses if particular outlays represent taxable income to the 

recipient. However, Treasury no longer estimates outlay equivalent values for tax expenditures and 

therefore estimated revenue losses were used instead.

b

The outlays are negative for this budget function as the present value of expected government 

collections for loan guarantee programs exceeds the present value of expected payments over the 

course of the loan guarantee in this particular year.

c

Fifty six of the 80 corporate tax expenditures also had individual revenue losses from individual 

taxpayers and other business entities using these tax expenditures totaling $125 billion in 2011.

Corporate-only tax expenditures generally support or encourage a 

specific type of entity or activity. See appendix V for the reported 

purposes for the 24 corporate-only tax expenditures that were the basis 

for our identification of related federal activities. Some of these tax 

expenditures have multiple reported purposes that are broader and in 

pursuit of national priorities. For example, seven corporate-only tax 

expenditures are aimed at encouraging or supporting the production of 

specific energy sources or the development of technology or 

infrastructure for certain energy sectors. These tax expenditures also 

have broader purposes such as promoting domestic energy production 

and energy security.

Other corporate-only tax expenditures provide support for certain types of 

entities, such as insurance companies or credit unions. Beyond providing 

support for these entities, these corporate-only tax expenditures may 

have additional purposes, which are different or broader in scope, related 

to why these types of entities receive tax support. However some of these 

tax expenditures were granted to entities prior to World War II and the 

rationale for continuing support to these entities may have changed over 

time, making it difficult to determine the purpose of providing the support. 

Our previous work highlighted the changing historical basis for one of 

Corporate-Only Tax 

Expenditures Support 

Certain Activities or 

Entities and May Seek to 

Contribute to Broader 

National Results
 

Page 16 GAO-13-339 Corporate Tax Expenditures

these tax expenditures—the tax exemption of credit union income—as 

shown in figure 4. 

Figure 4: Historical Basis for the Tax Exemption of Credit Union Income

Of the 24 corporate-only tax expenditures, one-third appear to share a 

similar purpose with federal spending programs. The largest number of 

these tax expenditures support purposes related to energy- and natural 

resources and environment-related purposes. These tax expenditures 

can be broken into two groups: (1) those aimed at encouraging fossil fuel 

production and development, and (2) those that are intended to 

encourage technology development, renewable energy, or energy 

efficiency. We identified related spending programs that appear to share 

a similar reported purpose with tax expenditures for the second category, 

but none for the first. See appendix VI for a summary list of related 

federal spending programs and activities.

While we identified related federal spending programs based on reported 

purposes specific to the entity or activity being supported, a number of 

these tax expenditures may also have one or more reported purposes 

that pursue broader or different aims. If a broader reported purpose was 

used, the extent of related spending programs identified may change 

considerably. For example, the bio-diesel and small agri-biodiesel 

producer tax credits, one of the corporate-only tax expenditures in 2011, 

have a specific reported purpose of encouraging production of biodiesel 

fuels, and we identified three federal spending programs that appear to 

share a similar purpose. Using a broader purpose for this tax expenditure 

would likely increase the number of federal spending programs identified 

that have a similar purpose. For example, our prior work on renewable 

One-Third of the Tax 

Expenditures Used Only 

by Corporations Appear to 

Share a Similar Purpose 

with Federal Spending 

Programs
 

Page 17 GAO-13-339 Corporate Tax Expenditures

energy identified nearly 700 federal initiatives related to renewable 

energy, including the bio-diesel and small agri-biodiesel producer tax 

credits.24 Applying an even broader national purpose, such as 

encouraging domestic energy production, could further increase the 

number of federal spending programs, as well as other federal activities, 

such as federal regulations and tax expenditures, which may share a 

similar purpose. Alternatively, applying a different purpose, such as 

supporting rural and farm areas, could lead to identifying different federal 

programs that may share a similar purpose.

We provided a draft of this report to the Secretary of the Treasury and the 

Acting Commissioner of Internal Revenue for comment. Treasury 

provided technical comments which we incorporated; IRS had no 

comments on the report.

As agreed with your offices, unless you publicly announce the contents of 

this report 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 Secretary of the Treasury, the Acting Commissioner of 

Internal Revenue, and other interested parties. In addition, the report will 

be available at no charge on the GAO website at http://www.gao.gov. 

 

24GAO, Renewable Energy: Federal Agencies Implement Hundreds of Initiatives, 

GAO-12-260 (Washington, D.C.: Feb. 27, 2012).

Agency Comments 

and Our Evaluation
 

Page 18 GAO-13-339 Corporate Tax Expenditures

If you have any questions on this report, 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. 

Key contributors to this report are listed in appendix VII.

James R. White

Director, Tax Issues

Strategic Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 19 GAO-13-339 Corporate Tax Expenditures

This report: (1) describes trends in the number of corporate tax 

expenditures and aggregate corporate revenue losses since 1986; (2) 

describes the use of corporate tax expenditures in 2011; and (3) 

compares the size of corporate tax expenditures to federal spending by 

budget function and, for tax expenditures used only by corporations, 

identifies spending programs with similar purposes.

To identify how corporate tax expenditures have changed in terms of their 

numbers and aggregate estimated revenue losses, we analyzed tax 

expenditure estimates developed by the Department of the Treasury 

(Treasury) and reported by the Office of Management and Budget in the 

Federal Budget’s Analytical Perspectives for fiscal years 1986 through 

2011. For this period, we determined which tax expenditures had 

estimates only for corporations, for both corporations and individuals, and 

only for individuals.1 We then summed the estimated revenue losses and 

the number of tax expenditures by taxpayer group to determine changes 

over time in trend data and to see how the amounts differed between 

these taxpayer groups.2

 

1

Although the tax expenditure concept can also be applied to other kinds of taxes, such as 

excise taxes, this report only covers tax expenditures for the federal income tax system. 

Tax expenditures may be available to corporate and individual taxpayers, including other 

types of business entities other than corporations. Treasury estimates the portion of 

revenue losses associated with corporate or individual taxpayers for each tax expenditure 

in its list. According to Treasury’s estimates, some tax expenditures may be used by only 

corporate taxpayers and some by only individual taxpayers while other tax expenditures 

may be used by both corporate and individual taxpayers. 

We converted all sums for each fiscal year into 

2011 constant dollars to adjust for inflation using the chain price indexes 

reported in the fiscal year 2013 federal budget. While sufficiently reliable 

as a gauge of general magnitude, summing revenue loss estimates does 

not take into account any interactions between tax expenditures. In 

addition, revenue loss estimates do not incorporate any behavioral 

2

The number of tax expenditures reflects all provisions reported by Treasury, including 

those enacted but effective for future fiscal years. Some provisions listed by Treasury as 

one tax expenditure may actually include multiple tax provisions aggregated together. In 

addition, fluctuations in the trend lines from year-to-year may reflect changes in Treasury’s 

methodology rather than changes in tax law enacted. See GAO-05-690. 

Appendix I: Objectives, Scope, and 

Methodology 

Trend Analysis of Treasury 

Tax Expenditure Estimates
Appendix I: Objectives, Scope, and 

Methodology

Page 20 GAO-13-339 Corporate Tax Expenditures

responses and, thus, do not represent the revenue amount that would be 

gained if a specific tax expenditure was repealed.3

For 2011, we analyzed those tax expenditures with only estimated 

corporate revenue losses and those with both corporate and individual 

revenue losses.4

To describe the number of taxpayers claiming corporate-only tax 

expenditures, we obtained estimates, where available, from the Internal 

Revenue Service (IRS) Statistics of Income (SOI) 2010 corporate sample 

on the number of corporate taxpayers claiming each of the corporate-only 

tax expenditures. These were the most recent estimates available at the 

time of our work. Data compiled by IRS SOI is based on a stratified, 

random sample of 63,630 corporate income tax returns for 2010 from 

corporations that end their corporate year from July 1, 2010, through June 

30, 2011. These estimates are subject to sampling errors. Based on the 

number of sampled returns and the coefficients of variation provided by 

SOI, we estimate that the upper bound of a 95 percent confidence interval 

for the estimated total number is less than 830 corporations for the 

following tax expenditures: alternative fuel production credit, bio-diesel 

and small agri-biodiesel producer tax credits, credit for energy efficient 

appliances, employer-provided child care credit, tax credit for orphan drug 

research, small life insurance company deduction, and Special Blue 

Cross/Blue Shield deduction. For our report, IRS SOI provided data on C 

corporations, and we excluded S corporations that pass through to 

For this study, we defined corporate tax expenditures as 

those that Treasury reported had estimated revenue losses for 

corporations in 2011; we describe any tax expenditures that Treasury 

estimated lost only corporate tax revenue as corporate-only tax 

expenditures. We did not conduct a legal analysis to determine which tax 

expenditures are available only to corporations.

 

3

For further discussion on summing of tax expenditure estimates and examples, see 

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).

4

In the fiscal year 2013 Analytical Perspectives, Treasury listed 173 tax expenditures. 

Three tax expenditures listed by Treasury did not have estimates for corporations or 

individuals in 2011 but did have estimates in future fiscal years and three tax expenditures 

had no estimates for corporations or individuals in any of the estimated fiscal years. Some 

of the tax expenditures identified as having corporate revenue losses in 2011 may have 

expired at the end of calendar year 2011 or 2012.

Fiscal Year 2011 Analysis 

of Treasury Tax 

Expenditure Estimates and 

Internal Revenue Service 

Data on Number of 

Recipients 
Appendix I: Objectives, Scope, and 

Methodology

Page 21 GAO-13-339 Corporate Tax Expenditures

individual taxpayers. C corporations include active corporations filing tax 

forms 1120, 1120-F, 1120-L, and 1120-PC but not tax forms 1120S, 

1120-REIT, and 1120-RIC. Overall, IRS SOI was able to provide 

estimates for nine tax credits or deductions because these tax 

expenditures were reported on an isolated line of an IRS form. However, 

for two of those tax credits, the requirement to protect taxpayer 

information forced IRS to exclude estimates of the number of tax 

recipients of those credits.5

We also obtained publicly available fiscal year 2010 data from IRS’s Tax 

Exempt and Government Entities division on four corporate-only tax 

expenditures. These corporate-only tax expenditures were tax 

exemptions and included the exemption of credit union income, tax 

exemption of certain insurance companies owned by tax-exempt 

organizations, exemption of certain mutuals’ and cooperatives’ income, 

and special alternative tax on small property and casualty insurance 

companies. For three of the four tax expenditures that we obtained 

publicly available data on the number of organizations claiming the tax 

exemption, the data represented only a portion of organizations to which 

the exemption applies as reporting requirements differ within each of 

these tax expenditures. From these two sources, IRS SOI estimates and 

publicly available data from IRS’s Tax Exempt and Government Entities 

division, we were able to obtain data on the number of taxpayers claiming 

13 of the 24 corporate-only tax expenditures, including credits, 

deductions, or exemptions. IRS was not able to provide data on the 

remaining eleven tax expenditures generally because they could not be 

isolated on an IRS form. To assess the reliability of the data and 

estimates, we reviewed agency documentation, interviewed agency 

officials, and reviewed our prior reports that have used the data and 

estimates. While we determined that the Treasury and IRS data and 

estimates were sufficiently reliable for our purposes, the IRS SOI 

corporate sample may not provide a precise estimate of the number of 

 

5

Federal tax information—tax returns and return information—are kept confidential under 

section 6103 of the Internal Revenue Code except as specifically authorized by Congress. 

Section 6103 specifies what federal tax information can be disclosed, to whom, and for 

what purposes.
Appendix I: Objectives, Scope, and 

Methodology

Page 22 GAO-13-339 Corporate Tax Expenditures

taxpayers claiming a tax expenditure when the number of taxpayers is 

very small.6

To analyze how large corporate tax expenditures are in comparison to 

federal spending by budget function, we summed the estimated revenue 

losses for those tax expenditures with corporate revenue losses in fiscal 

year 2011 by budget function from the fiscal year 2013 Analytical 

Perspectives. We compared them to federal outlays by budget function in 

fiscal year 2011, using data from the President’s fiscal year 2013 budget. 

Outlay-equivalent estimates—the amount of outlays required to deliver 

the same after-tax income as provided through the tax expenditure—may 

provide for a more appropriate comparison to federal spending than 

estimated revenue losses if particular outlays represent taxable income to 

the recipient. However, Treasury no longer estimates outlay equivalent 

values for tax expenditures and therefore, estimated revenue losses were 

used instead.

For this report we identified related programs based on a narrow reported 

purpose specific to the type of entity or activity that the corporate-only tax 

expenditures support or target. The corporate-only tax expenditures may 

have additional broader or different purposes. Using the narrow reported 

purposes allowed us to identify the tax and nontax programs that appear 

to most closely support the activity or entity the corporate-only tax 

expenditures support. We defined the narrow reported purpose as 

providing support for a certain activity or entity or in some cases, where 

the materials we reviewed discussed the tax expenditure as intended to 

encourage or increase a certain activity, we described the reported 

purpose as encouraging that type of activity. To identify the reported 

purpose of corporate-only tax expenditures, we reviewed their legislative 

histories and prior work by GAO, the Congressional Research Service 

(CRS), including the CRS’s 2010 tax expenditure compendium, and the 

Congressional Budget Office (CBO) that discussed the intended purpose 

or rationale of the tax expenditure.7

 

6 When the number of taxpayers claiming a tax expenditure is small, even with a large 

sample such as the IRS SOI corporate sample, estimates for small subpopulations like 

these often have large confidence intervals. For three of the corporate-only tax 

expenditures, the estimated number of corporations claiming the expenditure was less 

than 17. 

However, in identifying the narrow 

7

U.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).

Comparison of Estimated 

Revenue Losses and 

Federal Outlays and 

Reported Purpose and 

Those Federal Activities 

That Appear to Share a 

Similar Purpose
Appendix I: Objectives, Scope, and 

Methodology

Page 23 GAO-13-339 Corporate Tax Expenditures

reported purposes we were not trying to discern legislative intent. For 

some tax expenditures, the reported purpose may be clear from reviewing 

these sources, while for others the reported purpose may be more difficult 

to determine. Some tax expenditures support a certain type of entity but 

the reported purpose or rationale for providing support to that entity is 

difficult to determine or may have changed over time. Therefore, we 

describe the reported purpose as support for a type of entity, and we did 

not reconstruct the historical basis for providing such support.8

To identify federal spending programs that appear to share a similar 

reported purpose, we searched the October 2012 version of the Catalog 

of Federal Domestic Assistance (CFDA) using terms from the description 

of the corporate-only tax expenditures. We reviewed programs listed 

under the same budget functions and reviewed the descriptions of the 

programs initially identified to determine if they appear to share a similar 

reported purpose. We identified related tax expenditures by reviewing the 

fiscal year 2013 Analytical Perspectives, supplemented with the 

description in CRS’s 2010 tax expenditure compendium.9

For the inventory of related federal spending programs and tax 

expenditures, we collected descriptive information about each program, 

including (1) the name of the program, (2) the administering or 

implementing agencies or entities, and (3) the type of assistance 

provided. This information was collected from the October 2012 CFDA, 

fiscal year 2013 Analytical Perspectives, and agency documentation.10

 

8

We used one prior GAO report as an example of the historical rationale of one corporate 

tax expenditure. See GAO, Financial Institutions: Issues Regarding the Tax-Exempt 

Status of Credit Unions, 

The data we collected from the October 2012 CFDA for each of these 

three data elements was entered in the CFDA by the federal agencies 

responsible for the programs, but the agencies responsible did not verify 

GAO-06-220T (Washington, D.C: Nov. 3. 2005).

9 Office of Management and Budget, Analytical Perspectives, Budget of the United States 

Government, Fiscal Year 2013, (Washington, D.C.: 2012) and U.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). Treasury’s and CRS’s tax expenditure lists were generally similar as CRS’s relies 

on upon the Joint Committee on Taxation’s tax expenditure list.

10We obtained data from IRS for the tax expenditures identified as related, from the 

Department of Energy for the Integrated Biorefineries Program, and for the standards and 

regulations identified as related from the Department of Energy and the Environmental 

Protection Agency.
Appendix I: Objectives, Scope, and 

Methodology

Page 24 GAO-13-339 Corporate Tax Expenditures

our analysis of those data or identification of related programs. After 

reviewing CFDA documentation, our prior reports that have used the 

data, and spot checking these three data element against other publicly 

available agency documentation, we determined the data were reliable for 

our purposes. In reporting the administering or implementing agencies or 

entities, we generally reported the federal department level rather than 

the sub-department level agency except for IRS and the Environmental 

Protection Agency. In addition, for reporting the type of assistance, we 

grouped the types of assistance into the following categories: grant, 

cooperative agreement, direct payment, direct loan, guaranteed loan, 

insured loan, regulation/standard, tax exclusions, exemptions, or 

deductions, tax credits, deferrals of tax, and preferential tax rates. In 

some cases, the CFDA identified the programs we identified as providing 

multiple types of assistance listed above.

The list of nontax programs we identified that appear to share a similar 

specific reported purpose has not been reviewed by the agencies 

responsible for them. Treasury and IRS reviewed our identification of 

related tax expenditures. The list of tax and nontax programs, shown in 

appendix VI, does not represent a comprehensive list of related federal 

activities for several reasons:

• The CFDA may not capture certain types of federal activities, such as 

regulations or standards. Based on our prior work, we were able to 

identify some regulatory programs which we believe also appear to 

share a similar reported purpose to the tax expenditures in our scope.

• The federal spending programs and activities identified may also have 

multiple reported purposes, and only a component of the program or 

activity may appear to specifically share a similar reported purpose to 

the tax expenditure.

• Using a broader or different reported purpose to identify federal 

activities that appear to share a similar reported purpose would likely 

alter the makeup of activities that appear to be related.

We conducted our work from October 2012 to March 2013 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, 
Appendix I: Objectives, Scope, and 

Methodology

Page 25 GAO-13-339 Corporate Tax Expenditures

provide a reasonable basis for any findings and conclusions in this 

product.
Appendix II: Fifty-Six Tax Expenditures with 

Estimated Corporate and Individual Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011

Page 26 GAO-13-339 Corporate Tax Expenditures

Tax expenditure

Estimated 

corporate revenue 

losses (dollars in 

millions)

Corporate

share of total 

estimated revenue 

losses a Budget function

Accelerated depreciation of machinery and 

equipment

$76,140 64.2% Commerce and housing

Deduction for U.S. production activities 9,840 74.9 Commerce and housing

Credit for increasing research activities 8,300 94.7 General science, space, and 

technology

Exclusion of interest on public purpose 

State and local bonds

7,570 28.9 General purpose fiscal assistance

Credit for low-income housing investments 5,840 b 95.0 Commerce and housing

Exclusion of interest on life insurance 

savings 

2,420 11.0 Commerce and housing

Deductibility of charitable contributions, 

other than education and health

1,430 c 4.8 Education, training, employment, 

and social services

Energy production credit 1,410 d 90.4 Energy

Special Employee Stock Ownership Plan 

rules

1,030 68.7 Income security

Excess of percentage over cost depletion, 

fuels 

1,010 84.9 Energy

Expensing of research and experimentation 

expenditures

960 * General science, space, and 

technology

Exclusion of interest on hospital 

construction bonds

900 29.0 Health

Work opportunity tax credit 860 77.5 Education, training, employment, 

and social services

New markets tax credit 800 97.6 Community and regional 

development

Deductibility of charitable contributions 

(education)

650 c 18.5 Education, training, employment, 

and social services

Exclusion of interest on bonds for private 

nonprofit educational facilities 

610 29.0 Education, training, employment, 

and social services

Energy investment credit 560 d 80.0 Energy

Excess of percentage over cost depletion, 

nonfuel minerals 

550 94.8 Natural resources and environment

Alcohol fuel credits 480 e 96.0 Energy

Tax incentives for preservation of historic 

structures 

470 92.2 Natural resources and environment

Empowerment zones, the D.C. enterprise 

zone, and renewal communities

450 45.9 Community and regional 

development

Appendix II: Fifty-Six Tax Expenditures with 

Estimated Corporate and Individual Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011
Appendix II: Fifty-Six Tax Expenditures with 

Estimated Corporate and Individual Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011

Page 27 GAO-13-339 Corporate Tax Expenditures

Tax expenditure

Estimated 

corporate revenue 

losses (dollars in 

millions)

Corporate

share of total 

estimated revenue 

losses a Budget function

Expensing of exploration and development 

costs, fuels 

440 88.0 Energy

Advanced Energy Property Credit 390 90.7 Energy

Exclusion of interest on owner-occupied 

mortgage subsidy bonds 

310 29.2 Commerce and housing

Credit for employee health insurance 

expenses of small business

270 f 32.5 Health

Exclusion of interest on rental housing 

bonds

260 28.9 Commerce and housing

Exclusion of interest for airport, dock, and 

similar bonds

200 28.6 Community and regional 

development

Deductibility of charitable contributions 

(health)

190 c 5.6 Health

Expensing of environmental remediation 

costs

170 85.0 Community and regional 

development

Expensing of multiperiod timber growing 

costs 

160 64.0 Natural resources and environment

Exclusion of interest on student-loan bonds 140 29.2 Education, training, employment, 

and social services

Special rules for certain film and TV 

production

130 81.3 Commerce and housing

Tax credit for certain expenditures for 

maintaining railroad tracks

130 81.3 Transportation

Exclusion of interest on bonds for water, 

sewage, and hazardous waste facilities

120 28.6 Natural resources and environment

Amortize all geological and geophysical 

expenditures over 2 years

100 83.3 Energy

Exclusion of interest on small issue bonds 70 29.2 Commerce and housing

Allowance of deduction for certain energy 

efficient commercial building property

60 75.0 Energy

Qualified school construction bonds 60 g 28.6 Education, training, employment, 

and social services

Tribal Economic Development Bonds 60 35.3 Community and regional 

development

Exclusion of interest on bonds for Highway 

Projects and rail-truck transfer facilities

60 24.0 Transportation

Exclusion of gain or loss on sale or 

exchange of certain brownfield sites

40 66.7 Natural resources and environment

Tax credit and deduction for clean-fuel 

burning vehicles

40 44.4 Energy
Appendix II: Fifty-Six Tax Expenditures with 

Estimated Corporate and Individual Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011

Page 28 GAO-13-339 Corporate Tax Expenditures

Tax expenditure

Estimated 

corporate revenue 

losses (dollars in 

millions)

Corporate

share of total 

estimated revenue 

losses a Budget function

Employee retention credit for employers in 

certain federal disaster areas

20 66.7 Education, training, employment, 

and social services

Credit to holders of Gulf Tax Credit Bonds. 20 25.0 Community and regional 

development

Credit for holding clean renewable energy 

bonds

20 h 28.6 Energy

Credit for construction of new energy 

efficient homes

20 40.0 Energy

Exclusion of interest on energy facility 

bonds 

10 50.0 Energy

Deduction for endangered species recovery 

expenditures

10 50.0 Natural resources and environment

Investment credit for rehabilitation of 

structures (other than historic) 

10 50.0 Community and regional 

development

Credit for disabled access expenditures 10 50.0 Education, training, employment, 

and social services

Exclusion of utility conservation subsidies 10 4.5 Energy

Expensing of certain multiperiod production 

costs 

10 7.7 Agriculture 

Expensing of reforestation expenditures 10 16.7 Agriculture 

Accelerated depreciation on rental housing (20) 14.3 Commerce and housing

Expensing of certain small investments (40) * Commerce and housing

Accelerated depreciation of buildings other 

than rental housing

(3,300) 45.3% Commerce and housing

Total $122,470 

Source: GAO analysis of Office of Management and Budget budget data on tax expenditures, fiscal year 2013.

Note: Estimated revenue losses were negative for either corporations or individuals, meaning 

corporate revenue losses made up greater than 100 percent of the sum of both.

a

The total includes estimated individual revenue losses.

b

In addition, the credit for low-income housing investments has outlay effects of $3,480 million in 

2011.

c

Treasury estimates separate the deductibility of charitable contributions into three separate tax 

expenditures, deductibility for charitable contributions (health), deductibility for charitable contributions 

(education), deductibility for charitable contributions, other than health and education.

d

Firms can request an energy grant in lieu of the energy production credit or the energy investment 

credit for facilities placed in service in 2009 and 2010 or whose construction commenced in 2009 and 

2010.The effect of the grant on outlays was $3,510 million in 2011. See Office of Management and 

Budget, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2013, 

(Washington, D.C.: 2012). 
Appendix II: Fifty-Six Tax Expenditures with 

Estimated Corporate and Individual Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011

Page 29 GAO-13-339 Corporate Tax Expenditures

e

In addition, the alcohol fuel mixture credit results in a reduction in excise tax receipts of $6,520 

million in 2011.

f

In addition, the small business credit provision has outlay effects of $30 million in 2011.

g

In addition, the provision for school construction bonds has outlay effects of $430 million in 2011.

h

In addition, the provision has outlay effects of $20 million in 2011.
Appendix III: Twenty-Four Tax Expenditures 

with Only Estimated Corporate Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011

Page 30 GAO-13-339 Corporate Tax Expenditures

Tax expenditure

Estimated 

corporate 

revenue losses 

(dollars in 

millions) 

Estimated revenue 

losses as a 

percentage of all 

corporate revenue 

losses Budget function

Deferral of income from controlled foreign 

corporations 

$41,410 22.82% International affairs 

Deferred taxes for financial firms on certain 

income earned overseas

6,180 3.41 International affairs 

Graduated corporation income tax rate 3,280 1.81 Commerce and housing 

Inventory property sales source rules exception 3,160 1.74 International affairs 

Exemption of credit union income 1,110 0.61 Commerce and housing 

Tax credit for orphan drug research 770 0.42 Health 

Special Blue Cross/Blue Shield deduction 715 0.39 Health 

Temporary 50 percent expensing for equipment 

used in the refining of liquid fuels

670 0.37 Energy 

Credit for investment in clean coal facilities 370 0.20 Energy 

Credit for energy efficient appliances 280 0.15 Energy 

Tax exemption of certain insurance companies 

owned by tax-exempt organizations

200 0.11 Commerce and housing 

Credit for holders of zone academy bondsa 200 0.11 Education, training, employment, 

and social services 

Deferral of gain from dispositions of 

transmission property to implement Federal 

Energy Regulatory Commission restructuring 

policy

120 0.07 Energy 

Natural gas distribution pipelines treated as 15-

year property

120 0.07 Energy 

Exemption of certain mutuals’ and 

cooperatives’ income 

110 0.06 Community and regional 

development

Expensing of exploration and development 

costs, nonfuel minerals 

60 0.03 Natural resources and 

environment

Industrial carbon dioxide (CO2) capture and 

sequestration tax credit

60 0.03 Natural resources and 

environment 

Special alternative tax on small property and 

casualty insurance companies 

40 0.02 Commerce and housing 

Small life insurance company deduction 30 0.02 Commerce and housing 

Bio-diesel and small agri-biodiesel producer tax 

creditsb 20 0.01 Energy 

Deferral of gain on sale of farm refiners 20 0.01 Agriculture 

Deferral of tax on shipping companiesc 20 0.01 Transportation 

Alternative fuel production credit 10 0.01 Energy 

Appendix III: Twenty-Four Tax Expenditures 

with Only Estimated Corporate Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011
Appendix III: Twenty-Four Tax Expenditures 

with Only Estimated Corporate Revenue 

Losses Reported by Treasury, by Largest 

Estimated Corporate Revenue Losses, 2011

Page 31 GAO-13-339 Corporate Tax Expenditures

Tax expenditure

Estimated 

corporate 

revenue losses 

(dollars in 

millions) 

Estimated revenue 

losses as a 

percentage of all 

corporate revenue 

losses Budget function

Employer-provided child care credit 10 0.01 Education, training, employment, 

and social services 

Total $58,965 32.50% 

Source: GAO analysis of Office of Management and Budget budget data on tax expenditures, fiscal year 2013.

a

In addition, the credit for holders of zone academy bonds had outlay effects totaling $10 million in 

2011.

b

In addition, the biodiesel producer tax credit results in a reduction in excise tax receipts of $760 

million in 2011.

c

These figures do not account for the tonnage tax which shipping companies may opt into in lieu of 

the corporate income tax. The tonnage tax reduces the cost of this tax expenditure by $20 per year in 

each year of the budget.
Appendix IV: Number of Corporate Taxpayer 

Recipients for Corporate-Only Tax 

Expenditures, 2010

Page 32 GAO-13-339 Corporate Tax Expenditures

Tax expenditure

Number of taxpayer 

recipients

Tax exemption of certain insurance companies owned 

by tax-exempt organizations 11,749

Exemption of certain mutuals’ and cooperatives’ 

income

a

6,996 b

Exemption of credit union income

a

3,570 c

Special alternative tax on small property and casualty 

insurance companies

a

1,812 d

Bio-diesel and small agri-biodiesel producer tax credits

a

426

Small life insurance company deduction 325

Employer-provided child care credit 216

Tax credit for orphan drug research 99

Alternative fuel production credit 16

Special Blue Cross/Blue Shield deduction

e

14

Credit for energy efficient appliances 5 

Source: GAO analysis of Internal Revenue Service Statistics of Income Corporate Tax File Data estimates, 2010 and IRS Tax Exempt 

and Government Entities, Exempt Organizations, fiscal year 2011.

Note: Data on tax credits and deductions are from IRS SOI corporate file and includes active 

corporations that filed a return on forms 1120, 1120-F, 1120-L, and 1120-PC but not forms 1120S, 

1120-REIT, and 1120-RIC. For two tax credits, IRS had data on the number of tax recipients but to 

avoid disclosure of specific taxpayers could not report this data because there were so few taxpayers 

claiming those tax credits. Based on the number of sampled returns and the coefficients of variation 

provided by Internal Revenue Service Statistics of Income, we estimate that the upper bound of a 95 

percent confidence interval for the estimated total number is less than 830 corporations for the 

following tax expenditures: alternative fuel production credit, bio-diesel and small agri-biodiesel 

producer tax credits, credit for energy efficient appliances, employer-provided child care credit, tax 

credit for orphan drug research, small life insurance company deduction, and Special Blue Cross/Blue 

Shield deduction. Data on exemptions are from IRS Tax Exempt and Government Entities, Exempt 

Organizations division. Information from tax-exempt organization returns is available to the public and 

not subject to IRS disclosure regulations.

a

Fiscal year 2010 data, Internal Revenue Service Tax Exempt and Government Entities, Exempt 

Organizations.

b

Includes only benevolent life insurance associations.

c

State chartered credit unions exempt from federal income tax under section 501(c) (14) (A) of the 

Internal Revenue Code are required to file an annual information returns while Federally chartered 

credits unions are tax exempt under section 501(c) (1) but are not required to file an annual 

information return and therefore Internal Revenue Service does not report the number of Federally 

chartered credit unions.

d

Includes only mutual insurance companies.

e

According to the Internal Revenue Service Statistics of Income division, estimate should be used 

with caution due to small number sampled returns claiming this credit.

Appendix IV: Number of Corporate Taxpayer 

Recipients for Corporate-Only Tax 

Expenditures, 2010 
Appendix V: Reported Purpose Supporting a 

Specific Activity or Entity for 24 CorporateOnly Tax Expenditures

Page 33 GAO-13-339 Corporate Tax Expenditures

Number Tax expenditure Reported purpose

1 Inventory property sales source rules exception Support for firms that produce goods domestically and export 

2 Deferral of income from controlled foreign corporations Support for firms that operate in foreign countries 

3 Deferred taxes for financial firms on certain income earned 

overseas

Support for firms that operate in foreign countries 

4 Alternative fuel production credit Encourage production of nonconventional fuels

5 Bio-diesel and small agri-biodiesel producer tax credits Encourage production of biodiesel fuels

6 Deferral of gain from dispositions of transmission property 

to implement Federal Energy Regulatory Commission 

restructuring policy

Support for independent transmission companies

7 Credit for investment in clean coal facilities Encourage development of clean coal technologies 

8 Temporary 50 percent expensing for equipment used in the 

refining of liquid fuels

Encourage development of fossil fuel refinery capacity

9 Natural gas distribution pipelines treated as 15-year 

property

Encourage development of natural gas pipeline infrastructure

10 Credit for energy efficient appliances Encourage production of energy efficient appliances 

11 Expensing of exploration and development costs, nonfuel 

minerals

Encourage nonfuel mineral exploration and development

12 Industrial carbon dioxide (CO2 Encourage development of carbon capture and sequestration 

technologies

) capture and sequestration 

tax credit

13 Deferral of gain on sale of farm refiners Support to facilitate transfer of refiners and processors to 

farmers’ cooperatives

14 Exemption of credit union income Support for firms organized as credit unions

15 Special alternative tax on small property and casualty 

insurance companies

Support for small property and casualty insurance companies

16 Tax exemption of certain insurance companies owned by 

tax-exempt organizations

Support for insurance companies owned by tax-exempt 

organizations

17 Small life insurance company deduction Support for small life insurance companies

18 Graduated corporation income tax rate Support for small businesses and encourage corporate form 

of legal organization

19 Deferral of tax on shipping companies Support for domestic shipbuilding and registry under U.S. flag

20 Exemption of certain mutuals’ and cooperatives’ income Support for certain mutuals’ and cooperatives’ such as life 

insurance associations and telephone and electric companies

21 Credit for holders of zone academy bonds Support for school renovation, equipment, teacher training, 

and course materials in economically distressed areas

22 Employer-provided child care credit Encourage development of on-site employer child care 

facilities

23 Tax credit for orphan drug research Encourage drug research and development for rare diseases

24 Special Blue Cross/Blue Shield deduction Support for Blue Cross/Blue Shield organizations

Source: GAO analysis of Congressional Budget Office, Congressional Research Service, and GAO studies and legislative history.

Note: See appendix I for more detail on our methodology.

Appendix V: Reported Purpose Supporting a 

Specific Activity or Entity for 24 CorporateOnly Tax Expenditures
Appendix VI: Federal Activities That Appear to 

Share a Similar Purpose to 24 Corporate-Only 

Tax Expenditures

Page 34 GAO-13-339 Corporate Tax Expenditures

Number Tax expenditure Related federal activities Administering agency Type of assistance

1 Inventory property sales 

source rules exception

Export Guarantee Program Department of Agriculture Guaranteed/ insured loan

Emerging Markets Program Department of Agriculture Direct payment

Foreign Market Development 

Cooperator Program

Department of Agriculture Direct payment

Market Access Program Department of Agriculture Direct payment

Technical Assistance for 

Specialty Crops Program

Department of Agriculture Direct payment

Quality Samples Program Department of Agriculture Direct payment

CCC’s Dairy Export Incentive 

Program 

Department of Agriculture Direct payment

2 Deferral of income from 

controlled foreign 

corporations

Deferred taxes for financial 

firms on certain income earned 

overseas

Internal Revenue Service Deferral of tax

3 Deferred taxes for financial 

firms on certain income 

earned overseas

Deferral of income from 

controlled foreign corporations 

Internal Revenue Service Deferral of tax

4 Alternative fuel production 

credit

None identified - - 

5 Bio-diesel and small agribiodiesel producer tax 

credits

Bioenergy Program for 

Advanced Biofuels

Department of Agriculture Direct payment

Biorefinery Assistance Department of Agriculture Guaranteed/ insured loan

Integrated Biorefineries Department of Energy Grant

6 Deferral of gain from 

dispositions of transmission 

property to implement 

Federal Energy Regulatory 

Commission restructuring 

policy

None identified - - 

7 Credit for investment in 

clean coal facilities

Clean Coal Power Initiative Department of Energy Cooperative agreement 

Carbon Capture and Storage - 

FutureGen 2.0 

Department of Energy Cooperative agreement 

Industrial carbon dioxide (CO2) Internal Revenue Service

capture and sequestration tax 

credit

Tax credit

Qualified energy conservation 

bonds

Internal Revenue Service Tax credit

Advanced energy property 

credit

Internal Revenue Service Tax credit

8 Temporary 50 percent 

expensing for equipment 

used in the refining of liquid 

fuels

None identified - - 

Appendix VI: Federal Activities That Appear 

to Share a Similar Purpose to 24 CorporateOnly Tax Expenditures
Appendix VI: Federal Activities That Appear to 

Share a Similar Purpose to 24 Corporate-Only 

Tax Expenditures

Page 35 GAO-13-339 Corporate Tax Expenditures

Number Tax expenditure Related federal activities Administering agency Type of assistance

9 Natural gas distribution 

pipelines treated as 15-year 

property

None identified - - 

10 Credit for energy efficient 

appliances

Energy Efficient Appliance 

Rebate Program

Department of Energy Grant

Building Technologies Program 

Appliance & Equipment 

Standards

Department of Energy Regulation/standard

Energy Star Department of 

Energy/Environmental 

Protection Agency

Regulation/standard

11 Expensing of exploration 

and development costs, 

nonfuel minerals

Minerals Resources External 

Research Program

Department of the Interior Cooperative agreement

U.S. Geological Survey 

Research and Data Collection 

Department of the Interior Cooperative agreement

Minerals and Mining on Indian 

Lands

Department of the Interior Cooperative agreement 

and technical assistance

Excess of percentage over cost 

depletion, nonfuel minerals 

Internal Revenue Service Tax exclusion, exemption, 

or deduction 

12 Industrial carbon dioxide 

(CO2

Carbon Capture and Storage - 

) capture and FutureGen 2.0

sequestration tax credit

Department of Energy Cooperative agreement 

Industrial Carbon Capture and 

Storage (CCS) Application

Department of Energy Cooperative agreement

Credit for investment in clean 

coal facilities

Internal Revenue Service Tax credit

Qualified energy conservation 

bonds

Internal Revenue Service Tax exclusion, exemption, 

or deduction 

Advanced energy property 

credit

Internal Revenue Service Tax credit

Geologic Sequestration of 

Carbon Dioxide

Environmental Protection 

Agency

Regulation/standard

13 Deferral of gain on sale of 

farm refiners

None identified - - 

14 Exemption of credit union 

income

None identified - - 

15 Special alternative tax on 

small property and casualty 

insurance companies

None identified - - 

16 Tax exemption of certain 

insurance companies

owned by tax-exempt 

organizations

None identified - - 

17 Small life insurance 

company deduction

None identified - - 
Appendix VI: Federal Activities That Appear to 

Share a Similar Purpose to 24 Corporate-Only 

Tax Expenditures

Page 36 GAO-13-339 Corporate Tax Expenditures

Number Tax expenditure Related federal activities Administering agency Type of assistance

18 Graduated corporation 

income tax rate

None identified - - 

19 Deferral of tax on shipping 

companies

Federal Ship Financing 

Guarantees

Department of Transportation Guaranteed/insured Loan

Capital Construction Fund Department of Transportation Deferral of tax

Construction Reserve Fund Department of Transportation Deferral of tax

Assistance to Small Shipyards Department of Transportation Direct payment

Fisheries Finance Program Department of Commerce Direct loan

20 Exemption of certain 

mutuals’ and cooperatives’ 

income

None identified - - 

21 Credit for holders of zone 

academy bonds

Qualified school construction 

bonds

Internal Revenue Service Tax credit

22 Employer-provided child 

care credit

Employer provided child care 

exclusion

Internal Revenue Service Tax exclusion, exemption, 

or deduction 

23 Tax credit for orphan drug 

research

National Center for Advancing 

Translational Sciences

Department of Health and 

Human Services

Grant

National Center for Research 

Resources 

Department of Health and 

Human Services

Grant

24 Special Blue Cross/Blue 

Shield deduction

None identified - - 

Source: GAO analysis of Catalog of Federal Domestic Assistance and agency documentation.

Note: The list of nontax programs we identified that appear to share a similar specific reported 

purpose has not been reviewed by the agencies responsible for them. See appendix I for more detail 

on our methodology.
Appendix VII: GAO Contact and Staff 

Acknowledgments

Page 37 GAO-13-339 Corporate Tax Expenditures

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

In addition to the contact name above, MaryLynn Sergent (Assistant 

Director), Jason Vassilicos (Analyst-in-Charge), Kevin Daly, Robert 

Gebhart, Lois Hanshaw, Natalie Maddox, Donna Miller, Karen O’Conor, 

Mark Ryan, and Elwood D. White all made contributions to this report.

Appendix VII: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(451012)
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