Tax expenditures are deviations from a normative
tax structure which take the form of exemptions,
deductions, credits, etc. Tax expenditure reports show
estimates of revenues foregone from tax expenditures.
This study investigated report use in ten states by
(1) examining tax expenditure reporting processes and
report use and (2) applying three path models of
technical information use to tax expenditure reports.
Data were gathered from report preparers-legislative
staff persons and legislators.
The adoption of recommended standard features was
examined. Commonly adopted core features and innovative
features were identified. Examination of tax
expenditure reports and reporting processes supports the
following findings:
(1) The tax expenditure concept has broad acceptance.
(2) Reporting achieves an educational objective
by
(3) Use of reports is consistent with the use of
technical information in general.
(4) Legislators and staff persons share similar
perceptions on reporting.
(5) The practice of formally comparing tax and direct
expenditures has not been widely adopted.
(6) Awareness of tax expenditure costs may protect
revenues by fostering resistance to new tax
expenditures.
In the three specified path models of information
use, the dependent variable is level of report use. The
independent variables in each model represent three
theory of information use. The most paths were retained
as significant in the information specific model, but
the individual attribute model explained the highest
percentage of variance in level of use (28.1%). The
role constraint model was unsupported. A final combined
model, explaining 34.3% of variance in level of use,
shows that the information specific and personal
attribute models are related. In the combined model:
(1)report usefulness has the largest direct and total
effect on level of use, (2) the exogenous variables,
quality of report communication and fiscal analysis
attitude affect report usefulness by affecting the
intervening variables, relevance of report and technical
quality of report. This suggests report preparers may
influence marginally report use by improving report
communication and technical quality of reports.
facilitating an understanding of tax structure.
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