Advocates make the argument that the Education Tax Credit program is really just private money. They say that taxes not received as a result of deductions or tax credits are really not spending. This is a twisted case to make, but they try, using some very subtle logic.
Tax expenditures are defined in the Congressional Budget Act of 1974 as “revenue
losses attributable to provisions of the Federal tax laws which allow a special exclusion,
exemption, or deduction from gross income or which provide a special credit, a
preferential rate of tax, or a deferral of tax liability.”
Tax Expenditures: A Review and Analysis - from Rep. Jim Saxon (R-NJ), Vice Chairman, Joint Congressional Economic Committee
"This study examines a feature of the budget process called the tax expenditure budget.
The tax expenditure concept relies heavily on a normative notion that shielding certain
taxpayer income from taxation deprives government of its rightful revenues. This view is
inconsistent with the proposition that income belongs to the taxpayers and that tax liability
is determined through the democratic process, not through arbitrary, bureaucratic
assumptions. Furthermore, the methodology of the tax expenditure budget is problematic
as its expansive tax base treats the multiple taxation of saving as the norm. By using an
expansive view of income as the underlying assumption of the tax expenditure concept,
this viewpoint institutionalizes a particular bias into the decision-making process."
The conservative position that deductions and credits are not tax expenditures is presented starting on P4. Anyone who can follow it gets a gold star. It is so contorted that the reader is on outer space by the end. And it defies common sense.