A Congressional Budget Office study released Wednesday has confirmed that the nation’s tax code is not nearly progressive enough and that the structure of the code continues to benefit the richest Americans. The 10 most expensive individual tax expenditures (which add up to $12 trillion in lost revenue over 10 years) overwhelmingly favor the rich, according to the report. As reported by the Washington Post, the richest 20% of Americans received more than half of the benefits, while only about 20% of the benefits go to those in the middle and lowest brackets:
According to the CBO, the biggest tax breaks by dollar value this fiscal year are the tax-free treatment of employer-provided health insurance (about $260 billion), preferential rates for dividends and capital gains ($160 billion) and tax-free contributions to retirement savings ($140 billion). Deductions for state and local taxes ($80 billion), mortgage interest ($70 billion) and contributions to charity ($40 billion) are also among the top 10, as is the tax-free treatment of capital gains on assets transferred at death ($50 billion).
All of those breaks primarily benefit wealthy households, according to the CBO.
But the CBO noted that tax breaks are essentially equivalent to government spending, intended to encourage and subsidize various behaviors, such as buying a home, saving for retirement and giving to charities. The rich are likely to engage in those activities even without such “financial assistance,” raising the question of whether that money could be better spent on other priorities.
This article has it right – the rich shouldn’t have their lifestyles — like multi-million dollar homes — subsidized by the rest of us. Instead, we should limit the value of tax expenditures for wealthier households making more than $250,000 a year. President Obama’s proposal to limit the tax deductions of the wealthy to 28% would mean they do not get a larger tax break than middle-class taxpayers when buying a home or saving for retirement.
In February, Americans for Tax Fairness released a nationwide survey that found that 66% of Americans believed that the richest 2% should pay more in taxes, while 56% supported limiting deductions for people making over $250,000 per year. Americans are in agreement- it’s time for the wealthy to pay their fair share.