PEP / Pease (Tax Policy) - PEP is Personal Productivity - Average real output per unit Exemption Phase-out designed to eliminate of input. Labor productivity is average real personal income exemptions for high output per hour of labor. The growth of labor earners; 3) Pease is a similar phase-out, but productivity is defined as the growth of real instead of applying to personal exemption, it output that is not explained by the growth of applies to most of the itemized deductions of labor input alone. Total factor productivity is a taxpayer’s claims (mortgage interest, average real output per unit of combined charitable gifts, state & local taxes paid, labor and capital services. The growth of etc.); Pease is named after Representative total factor productivity is defined as the Donald Pease (D-OH) who pushed for its growth of real output that is not explained by enactment in 1990. the growth of labor and capital. Labor ; productivity and total factor productivity differ Present Value - A single number that in that increases in capital per worker raise expresses a flow of current and future labor productivity but not total factor income (or payments) in terms of an productivity. equivalent lump sum received (or paid) today. The present value depends on the Tax Expenditures - Losses to the U.S. rate of interest used (the discount rate). For treasury from granting certain deductions, example, if $100 is invested on January 1 at exemptions, or credits to specific categories an annual interest rate of 5 percent, it will of taxpayers. Tax breaks are one method grow to $105 by January 1 of the next year. Congress uses to promote certain policy Hence, at an annual 5 percent interest rate, objectives. For example, deductions for the present value of $105 payable a year mortgages encourage home ownership, from today is $100. while credits for childcare expenses allow . . single parents to work. Tax expenditures are Patient Protection and Affordable Care an alternative to direc