When appropriations bills pass in Congress, OMB apportions the money to agencies, which in tum allot money to programs and activities. It was first used in 1980 and has become a mainstay of deficit-reduction efforts since. 13 Revenues Taxes, customs, duties, some user fees and most other receipts paid to the federal government. 14 Tax Expenditures Revenue losses attributable to provisions of the federal tax law that allow a special exclusion or deduction from gross income, or that provide a special credit, preferential tax rate or deferral of tax liability. Tax expenditures may be considered subsidies provided through the tax system to encourage certain activities and to assist certain groups.
Tax expenditures involve no payment of funds from the government to the private sector.
Rather, the Treasury forgoes some of the receipts that it otherwise would have collected, and the beneficiary taxpayers pay lower taxes than they otherwise would have had to pay. Congressional Quarterly's Understanding Congressional Budgeting, VIII-2. Congressional Quarterly's Understanding Congressional Budgeting, II-9. 7 Congressional Quarterly's Understanding Congressional Budgeting, VIII-4. 10 Congressional Quarterly's Understanding Congressional Budgeting, VIII-6.