What are tax expenditures? What are their strengths and weaknesses?

  1. What are revenue enhancement outgos? What are their strengths and failings?


Tax expenditures or revenue enhancement interruptions are gross losingss attributable to revenue enhancement commissariats. Harmonizing to ( OEDC, 2010 ) “tax outgos are commissariats that let certain groups of people, such as little business communities, retired people or working female parents, or those who have undertaken certain activities, such as charitable contributions, to pay less in taxes” . Tax expenditures frequently consequence from the usage of the revenue enhancement system to advance societal ends. In add-on, revenue enhancement outgo reflects the ways in which authoritiess spend money indirectly, through particular commissariats in the revenue enhancement codification ( Howard, 2003 ) . Tax expenditures include credits, tax write-offs, discriminatory revenue enhancement rates, and recesss of revenue enhancement liability ( Howard 2102 ) . Tax expenditures can take many signifiers. For case: refundable revenue enhancement outgos at The US are the earned income revenue enhancement recognition ( EITC ) , the kid revenue enhancement recognition ( CTC ) , and Health Coverage Tax Credit ( HCTC ) .

Tax expenditures strengths:

I consider that revenue enhancement outgos have three chief strengths: 1 ) Tax outgo construct is loosely accepted among public finance and specializers every bit good ( Howard 2003 ) . 2 ) Most budget experts view revenue enhancement outgo as a utile tool in pull offing the size and range of the federal authorities ( Burman, 2003 ) . Harmonizing to Howard, revenue enhancement outgo is good tool for seeing “The hidden public assistance state.” 3 ) From the point of position of centrists and conservativists, revenue enhancement outgos suggest greater possibilities for societal policy enlargement, they are less intrusive and less bureaucratic, and promote single pick ( Halfmann, Lecture Notes, 2014 ) .

Tax expenditures failings:

From my point of position revenue enhancement outgos have three chief failings: 1 )Unfair distributional consequence. Harmonizing to Howard ( 2007, 2012 ) in the instance of The United States revenue enhancement interruption significantly aggravates inequalities of income and wealth ( Howard, Tax Outgo: What They Are and Who Benefits, 2012 ) . Most U.S revenue enhancement outgos favor high earners. Tax alleviation is most valuable to people who have high revenue enhancements ( Halfmann 2014 ) . For case: chiefly revenue enhancement outgos like the place mortgage involvement tax write-off benefit chiefly the in-between and upper-middle categories ( Howard 2007 ) . Another illustration that shows this disparities is the fact that flush workers are more likely to work for companies that offer pension and wellness benefits subsidized by taxpayers, while many low-wage workers work at little concerns that do non offer benefits and therefore do non bask this revenue enhancement interruption ( Howard 2007 ) . 2 )Limited transparence, revenue enhancement outgos are revenue enhancement commissariats that are non structural characteristics of the income revenue enhancement or necessary to mensurate income accurately. Therefore is difficult for policy-makers to command ( Halfmann, Lecture Notes, 2014 ) 2 )Tax outgos reflect political power.As I said before, U.S revenue enhancement outgos favor high earners. Therefore the most involvement to keep this scenario are employers, insurance companies, wellness attention industry who participate straight or indirectly from the benefit of revenue enhancement outgos. Tax outgo is pushed by suppliers non donees ( Halfmann, Lecture Notes, 2014 ) . These suppliers play an of import function in support political runs ( Howard, 2007 ) .

3. What are the chief differences between the societal public assistance systems of the United States and Sweden?

From my point of position, there are three chief differences between the societal public assistance systems of the United States and Sweden. These are: 1 ) Spending as proportion of GDP 2 ) Social welfare government, and 3 ) Gender equality.

  1. Spending as proportion of GDP.

The public societal outgo as a per centum of GDP is 15.8 % at The U.S. and 35.7 % at Sweden. Sing revenue enhancement outgo, the comparative size the American public assistance province is 16.5 % and at Sweden 28.5 % . Therefore, under the last comparing Swedish public assistance provinces is 1.7 times larger than the U.S. ( Howard, 2003 )

  1. Welfare government.

Harmonizing to Olsen ( 2002 ) The United States of America has a broad public assistance government, where the logic of the market and minimum province intercession are highlighted. It is decentralized and revenue enhancement outgo plays an of import function. The U.S. as a broad public assistance province has really basic societal safety cyberspace. In general broad societal plans are reactive instead than preventative. Liberal public assistance provinces are characterized by the predomination of societal aid. This is chiefly direct hard currency transportations or societal services that use some income trial to specify eligibility or in some societal plans the receivers for receive the benefit must be working. A good illustration of that is Earned Income Tax Credit. In contrast, Sweden has a societal democratic public assistance government. This government tries to supply optimum status than merely to supply basic societal safety cyberspace. Their aim is non merely to assist the hapless. They try to get rid of poorness and they fight for a more classless distribution of the income. In this context full employment, well-paying occupation, active labour market policy, cosmopolitan wellness attention services, sickness insurance, safe working environment, generous unemployment insurance, and nice retirement are considered footing right for the occupants among others ( Olsen, 2002 ) , ( Halfmann, Lecture Notes, 2014 ) . In add-on Swedish public assistance has other specific plans for mark population such as aged, handicapped, substance maltreaters, refugees and immigrants ( Olsen, 2002 ) Furthermore, Swedish public assistance has high decommodification, doing people less reliant on on labour market for subsistence ( Halfmann, Lecture Notes, 2014 ) .

  1. Gender equality.

There is a immense difference how The U.S and Swedish public assistance addresses gender equality in its policies. At The U.S. exists a difference between gender functions. For case: in some countries work forces are acquiring paid more than adult females, there are employer favoritism in relation to adult females ( Mommy revenue enhancement ) ( Halfmann, Lecture Notes, 2014 ) . In add-on, Orloff, ( 2002 ) states that The U.S. public assistance has eliminated societal rights and caregiving. For illustration: hapless individual female parent has to work in order to have the benefits of EITC plan, but they can non take attention for their kids full clip. Harmonizing to ( Bennhold, 2010 ) there is gender equality in Sweden and it is just for both adult females and work forces. For case, it exists: occupation protection for non-working female parents until kid is school-age 2 ) Paid gestation and Swedish male parents are mandated to take parental go forth 2 ) and besides it exists revenue enhancement alleviation for working parents, particularly individual 1s ( Halfmann, Lecture Notes, 2014 )


Bennhold, K. ( 2010, June 9 ) . In Sweden, Men Can Have It all.New York Times.

Burman, L. ( 2003 ) . Is the Tax Outgo Concept Still Relevant?National Tax Journal, 613-27.

Halfmann, D. ( 2014 ) .Social Policy[ PowerPoint slides, Lecture Notes ] .

Howard, C. ( 2003 ) . Is the American Welfare province Unusually Small?Political Sciences and Politicss, 411-416.

Howard, C. ( 2007 ) . The Haves and the Have-Lots.Democracy Journal, 48-58.

Howard, C. ( 2012 ) .Tax Outgo: What They Are and Who Benefits.Cambridge: Scholars Strategy Network.

OEDC. ( 2010 ) .Tax Outgos in OECD Countries.Paris: OECD.

Olsen, G. ( 2002 ) .The Politics of the Welfare State: Canada Sweden and the United States.Oxford: Oxford University Press.

Orloff, A. ( 2002 ) . Explaining US welfare reform: power, gender, race and the US policy bequest.Critical Social Policy, 96–118.