Shadow Welfare II

Abstract

Abstract Tax expenditures are any exemption, credit, deduction, or exclusion from the payment of taxes. At the state level, such expenditures often remain unaccounted for, create little economic development, and leave state and local governments with reduced resources for funding basic services such as fire, police, schools, and other general welfare spending. This paper illustrates methods state and local governments use to grant large tax breaks, the resulting financial problems legislators typically solve by raising individual taxes or cutting spending, and the implications for social welfare practitioners.