Taxpayers' ability to deduct contributions to charities from their taxable income is an example of a tax expenditure.

Question

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A tax expenditure is a provision in the tax code that provides a reduction in taxes rather than a direct government expenditure. Allowing taxpayers to deduct charitable contributions is an example of a tax expenditure since it reduces their taxable income and therefore reduces the amount of tax they owe.

Taxpayers' Ability to Deduct Contributions to Charities from Their Taxable