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A tax incentive is a special provision of the tax code designed to foster particular behavior on the part of tax-paying firms or individuals with the intention of encouraging some particular behavior that is believed to be socially beneficial. There has been a move toward designing specialized tax incentives that encourage saving for particular activities or spending on special goods and services. Unlike other tax provisions, which define the amount or transaction subject to tax and the rate or rates at which the tax applies, tax incentives represent deliberate departures from otherwise applicable taxes to encourage the activity at which the incentive is directed. For this reason, these subsidies are described as tax expenditures. These can take many forms, such as permanent exclusions from income, ...

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