As I mentioned in yesterday’s blog post, we think that some of our answers to follow-up questions from Congressional hearings may be of general interest, so we’re posting them.
Following a hearing on the budget and economic outlook, a Member of Congress asked for our projections of tax expenditures as a share of gross domestic product (GDP) over the next decade. Below is our answer (provided as part of a set of answers to questions for the record):
On the basis of estimates prepared by the staff of the Joint Committee on Taxation, CBO projects that, under current law, all tax expenditures in the individual and corporate income tax systems will total roughly 8.2 percent of GDP in fiscal year 2014, if their effects on social insurance taxes as well as on corporate and individual income taxes are included. CBO estimates that the comparable total for 2017 is 9.0 percent. The agency has not estimated the magnitude of all tax expenditures beyond 2017, but the percentage of GDP for the years 2018 to 2024 is probably similar to the percentage estimated for 2017. By comparison, CBO projects that total federal tax revenue will be close to 18 percent of GDP during the coming decade under current law.