Federal budget formulation processes include fewer controls and reviews, and provide less information on tax expenditures—which represented an estimated $1.23 trillion in forgone revenues in fiscal year 2015—than for discretionary or mandatory spending. For example, in the President’s budget, tax expenditure revenue loss estimates are presented separately from related spending, making their...

The Earned Income Tax Credit (EITC), the Additional Child Tax Credit (ACTC), and the American Opportunity Tax Credit (AOTC) provide tax benefits to millions of taxpayers—many of whom are low-income—who are working, raising children, or pursuing higher education. These credits are refundable in that, in addition to offsetting tax liability, any excess credit over the tax liability is refunded t...

Internal Revenue Service (IRS) data are not sufficient for identifying who claims a tax expenditure and how much they claim for $492 billion or almost half the dollar value of all tax expenditures that GAO examined. Such basic data are not available at IRS for tax expenditures because they do not have their own line item on a tax form. This included $102 billion of tax expenditures that were not o...

GAO's previous work has shown that, once enacted, tax expenditures and their relative contributions toward achieving federal missions and goals are often less visible than spending programs, which are subject to more systematic review. One reason for this is that they often operate, in practice, like entitlement programs not subject to annual appropriations. Since 1994, GAO has recommended greater...

The tax credit for qualified research expenses provides significant subsidies to encourage business investment in research intended to foster innovation and promote long-term economic growth. Generally the credit provides a subsidy for research spending in excess of a base amount but concerns have been raised about its design and administrability. Government Accountability Office (GAO) was asked t...

Developers can apply for federal Low-Income Housing Tax Credits to help them build affordable housing projects. The amount of credit depends largely on project costs. Project costs we looked at varied widely (shown below), and federal oversight of costs is limited. Federal and state agencies could use data on variables that affect cost—such as square footage and building type—to better monito...

In 2018, there were 22 tax credit scholarship (TCS) programs authorized across 18 states, which provide state tax credits for individual and business donations that fund scholarships for students to attend elementary and secondary private schools (see figure).Tax Credit Scholarship Programs by State, Authorized as of January 2018Note: Each state has one program, except for Pennsylvania and Arizona...

How do taxpayers know if they will get a tax refund or owe money? Employers must withhold federal income taxes on employee pay, and employees can claim allowances to exclude part of their pay from such withholding. IRS publishes withholding tables so employers know how much to withhold. Recent tax law changes gave Treasury discretion to set the value of the withholding allowance for 2018. Treasu...

We examined 2018 enrollment in Affordable Care Act health insurance exchanges and federal efforts to encourage enrollment. We found: About 8.7 million people bought insurance in 2018 through the federal website (healthcare.gov), 5% less than in 2017. Health and Human Services reduced its advertising and other consumer outreach. The 23 stakeholders we interviewed had mixed views about the effect...

This report provides an update on the nation's fiscal health as of the end of fiscal year 2017, and describes its likely fiscal future if policies don’t change. Among its findings: The federal government’s current fiscal path is unsustainable. Publicly held debt was 76 percent of GDP at the end of fiscal year 2017 and it will surpass its historical high of 106 percent within 14 to 22 years. ...

The six agencies GAO reviewed reported taking various approaches related to key components of estimating improper payments—shown in the figure below—for 10 selected programs, which collectively reported outlays of over $2.5 trillion for fiscal year 2017.Key Components in the Development of Improper Payment EstimatesSample selection. Eight of the 10 programs GAO reviewed reported using statist...

Fraudsters used false identities to steal at least $1.68 billion in tax refunds in 2016. To help address fraud and compliance issues, Congress moved up the deadline for employers to submit W-2s and had IRS hold refunds for those claiming certain tax credits beginning in 2017. These changes gave IRS more time to work on identifying discrepancies before issuing refunds. We found this process helpe...

The amount of money people spend on prescription drugs has nearly doubled since the1990s. Much of this increase is due to expensive brand-name drugs, but the prices of some generics have also gone up. We looked into changes in the drug industry and found that pharmaceutical and biotechnology sales revenue increased from $534 billion to $775 billion between 2006 and 2015. Additionally, 67% of drug...

Under the Affordable Care Act, people purchasing insurance through an exchange can re-enroll each year. If they don't select a plan, they're automatically re-enrolled in their existing plan or a similar one, if available. In 2016, 30% of re-enrollments were automatic. We examined whether automatic re-enrollment could have unintended financial consequences for consumers. We found that, from 2015 t...

According to GAO's analysis of data in the Census Bureau's Current Population Survey (CPS), on average, low-wage workers worked fewer hours per week, were more highly concentrated in a few industries and occupations, and had lower educational attainment than workers earning hourly wages above $16 in each year GAO reviewed—1995, 2000, 2005, 2010, 2015 and 2016. Their percentage of the U.S. workfo...