Richest 20% to Benefit Most From US Tax Breaks: CBO
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More than half of the biggest U.S. tax breaks will benefit wealthier households significantly more than lower income ones, a new study from the nonpartisan Congressional Budget Office revealed.
The 10 largest U.S. tax breaks will save taxpayers more than $900 billion this year, with a little more than half the benefits flowing to the richest 20 percent of households, congressional budget analysts said on Wednesday.
More than half of the biggest U.S. tax breaks will benefit wealthier households significantly more than lower income ones, a new study from the nonpartisan Congressional Budget Office revealed.
The 10 largest U.S. tax breaks will save taxpayers more than $900 billion this year, with a little more than half the benefits flowing to the richest 20 percent of households, congressional budget analysts said on Wednesday.
The top 10 tax breaks account for about two-thirds of all tax expenditures. In a year, the government is expected to forgo $1.3 trillion in potential taxes.
Further, the richest 1 percent of households, families earning roughly $450,000 or more, get an especially big haul — about 17 percent of the total savings, after including preferential treatment of investment income and deductions for sales and income taxes paid to state and local governments.
On the other hand, households in the bottom 20 percent of U.S. income distribution will receive just 11.7 percent of their after-tax income from the breaks, relying on benefits such as the earned income tax credit.
The report was commissioned amid a partisan split over how to revise and reform the U.S. tax code.
Democrats want to curb tax breaks for high-income taxpayers in order to rein in the federal budget deficit and seized on the report, saying it provides fresh evidence for President Barack Obama’s claim that limiting tax breaks for the rich offers a more sensible solution to deficit reduction that sharp expenditure cuts known as the sequester.
Obama’s budget calls for raising $529 billion over the next decade by limiting the value of tax breaks for top earners.
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“The CBO report underscores the need to go beyond the rhetoric of lowering tax rates without indication of how that would be achieved or the implications for economic growth and tax equity,” said Sander Levin, the highest ranking Democrat on the House Ways and Means Committee, the panel that is trying to advance tax reform this year.
Republicans, meanwhile, want to reform the tax code by eliminating certain deductions, credits and exclusions, but they do not want to divert any resulting revenues toward deficit reduction. Instead they want to use the savings to lower rates, which they say will accelerate economic growth and increase revenue collection.
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