In the USA, during the period of 1983-2011, the tax expenses (tax reliefs provided to taxpayers as an alternative
to budget expenses) fluctuated between 5.6% and 9% of the GDP (Burman & Phaur, 2011).
Let us consider the costs of tax relieves in detail.
Direct costs associated with the shortfall in revenues. Tax relieves do not affect adversely on revenues when
investments that are subject to the exemptions are additional to those that would be implemented in the absence
of the relieves. The shortfall in budget revenues as a result of tax relieves may occur due to the influence of two
main reasons:
• The foregone revenue from projects that would have been made even in the absence of tax relieves
(redundancy);