Tax Policy Center president Donald Marron has a brief in Tax Notes that shows that spending on tax expenditures are higher than the commonly reported $1.1 trillion figure. As Treasury does not release the figures of the cost of all tax expenditures, they are often estimated by summing the individual and corporate tax preferences. However, this method excludes other provisions that reduce total tax revenues such as payroll or excise tax expenditures.

In 2012, individual income tax expenditures will reduce tax receipts by $942 billion and corporate tax expenditures by $151 billion. This gets you to the commonly cited figure of around $1.1 trillion. But when you include the outlay effects of refundable tax credits--mostly from the earned income tax credit and the child tax credit--that adds another $91 billion. In addition, the exclusion for employer-provided health insurance also applies to the payroll tax, reducing that revenue by $109 billion. Other credits against excise taxes, mainly for alcohol fuels, add another $4 billion. Including these tax expenditure figures yields a total of $1.3 trillion, a more comprehensive estimate of how much tax expenditures cost the country.

Furthermore, using these projections, the total size of tax expenditures will grow to nearly $1.8 trillion by 2017.

Still, this estimate is caveated by the fact that the sum is not necessarily equal to the parts; in other words, simply repealing all these tax expenditures would not save $1.3 trillion this year. Many of these preferences interact with each other and other provisions of the tax code. As Marron explains:

There are several reasons to believe that the potential revenue gains from rolling back tax preferences are less than the headline estimates. One reason is that the estimates are static—they measure the taxes people save today but do not account for the various ways that people might react if a preference were reduced or eliminated; those reactions may reduce potential revenues. Second, most reforms would phase out such preferences rather than eliminate them immediately. That too reduces potential revenues, at least over the next decade or so.

In addition, tax reform plans that lower marginal tax rates and eliminate or reduce tax expenditures cannot rely on these estimates, since reducing marginal rates will also reduce the value of tax expenditures. Therefore, those trying to offset lower marginal rates by repealing tax expenditures will have less than $1.3 trillion available to cut. Still, you can see by these estimates that tax expenditures are an enormous part of the budget.