Abstract
Tax expenditures are revenue losses resulting from provisions in tax law that allow a special exclusion, exemption, or deduction from normal payment. Property tax abatement is a full or partial reduction in the normal property tax liability owed to a state or local jurisdiction. Accordingly, a calculation of annual tax expenditures for a state or locality should include some accounting for annual property tax abatement. The traditional manner of doing this is to sum the annual value of property tax revenue foregone through abatement. The intent of this paper is to question this simple approach. Offered here are specific characteristics to look for in property tax abatement programs that make it more reasonable to count all abatement as tax expenditure. Included also are examples of how to do this for three states. A refinement of how abatement translates into tax expenditure is a positive step forward in developing the tools needed to evaluate the desirability of property tax abatement.