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Tax Expenditure Budgets: A Critical View

5 Pages Posted: 16 Jun 2007  

Douglas A. Kahn

University of Michigan Law School

Jeffrey Sean Lehman

New York University – Shanghai


In this article, Professors Kahn and Lehman argue that the concept of tax expenditures is flawed as a tool for measuring the propriety of tax provisions. It assumes the existence of one true and correct standard of federal income taxation that applies to all circumstances. To make this assumption, proponents of the concept implicitly make a particular moral claim about the relative importance of a wide range of values, including efficiency, consumption/savings neutrality, privacy, distributional equity, administrability, charity, and pragmatism. They then measure a tax provision's normalcy exclusively by how it conforms to their Platonic concept of income.

Professors Kahn and Lehman maintain that there is no single ideal concept of income. Instead, there are a number of plausible candidates, the choice among which constitutes a contestable, political decision. The tax expenditure budgets create an illusion of value-free scientific precision in a world whether it is neither possible nor desirable to ignore the range of societal values that speak to how an income tax is structured. The authors believe that the tax expenditure concept distorts public debate over tax provisions.

Keywords: tax expendture budget, tax expenditures, neutrality

JEL Classification: H20

Suggested Citation

Kahn, Douglas A. and Lehman, Jeffrey Sean, Tax Expenditure Budgets: A Critical View. Tax Notes, pp. 1661-1665, March 30, 1992. Available at SSRN:

Douglas A. Kahn (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4043 (Phone)

Jeffrey Sean Lehman

New York University – Shanghai ( email )

1555 Century Ave
Pudong, Shanghai 200122

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