Tax expenditures refer to the revenue losses attributable to provisions in the tax laws that allow certain income to be exempt from taxation, or allow special credits, deductions, exclusions, or lower tax rates. These are essentially social welfare benefits delivered through the tax system by providing financial benefits to certain groups or for certain activities.

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Tax Expenditures Are

Question 18

Multiple Choice

Tax expenditures are

A) costs of administering the tax collection system.
B) the cost to the government of tax evasion.
C) social welfare benefits delivered through the tax system.
D) largely kept by the local government.

Correct Answer: