Robert J. Peroni (Texas) presents Can Tax Expenditure Analysis be Divorced from a Normative Tax Base?: A Critique of the "New Paradigm" and its Denouement (with J. Clifton Fleming, Jr. (BYU)) at NYU today as part of its Colloquium Series on Tax Policy and Public Finance. The co-convenors of the colloquium are Daniel Shaviro (NYU) & Mihir Desai (Harvard Business School).  Here is the Conclusion:

The analysis in this article has contended that traditional [tax expenditure analysis], which uses the [Schanz-Haig-Simons] baseline in identifying tax expenditure provisions, is properly grounded in the ability-to-pay and neutrality principles. It has an established core that makes it an important and effective analytical tool of tax policy, notwithstanding the many criticisms that it has endured over the years. In our view, the central purpose of TEA is to serve as a triggering mechanism for a rigorous cost/benefit analysis of governmental programs implemented through the federal income tax system and that the SHS baseline is the appropriate measuring rod for this purpose. Stated differently, TEA’s main focus is on transparency and accountability concerning governmental programs delivered through the tax system. It is meant to have a much needed restraining effect on the strong impulse by many members of Congress to support the enactment of governmental programs in the form of tax incentives and subsidies that would not pass muster under a cost/benefit analysis as direct spending programs and that would have a detrimental effect on income tax compliance and enforcement. Thus, while we welcome the Joint Committee Staff’s 2008-2010 effort to reinvigorate TEA as a tool of tax policy analysis, we believe that if its rejection of the SHS baseline had endured, it would have undermined, rather than strengthened, TEA. We also believe that the Joint Committee Staff’s 2008 report gave far too much credence to the critics of the SHS baseline, which is a widely accepted criterion for evaluating income tax provisions. In addition, we believe the Joint Committee Staff’s 2008-2010 TEA approach would not have satisfied most critics of TEA and would have opened up new avenues of attack on the TEA process. For these reasons, we applaud the denouement of the “new paradigm” and welcome the Joint Committee Staff’s return to the SHS baseline.