Richest 20 percent (mostly all white folks) get half the overall savings from U.S. tax breaks, CBO says

Wash Post

The 10 largest breaks in the U.S. tax code will save taxpayers more than $900 billion this year, with just over half the benefits flowing to the richest 20 percent of households, congressional budget analysts said Wednesday.

And the richest 1 percent of households, those with at least $327,000 in annual income, get an especially big haul — about 17 percent of the total savings, according to the report by the nonpartisan Congressional Budget Office.

“Higher-income households benefit significantly more from tax expenditures in dollar terms than do lower income households,” the report says.

Republicans dismissed the report as a rehash of information that has long been widely available. But Democrats seized on the new analysis, calling fresh support for President Obama’s argument that limiting tax breaks for the rich is a more sensible path to deficit reduction than the sharp cuts to agency spending known as the sequester.

Rep. Chris Van Hollen (Md.), the senior Democrat on the House Budget Committee, noted the recent announcement that schoolteachers of children of active-duty military families at Fort Bragg will be furloughed for five days in the fall because of the sequester.

“We think it’s important to decide whether we want to prioritize education for the kids of our servicemen and women or tax expenditures for the top one percent,” Van Hollen said.

According to the CBO, the top tax breaks by dollar value this year are the tax-free treatment of employer-provided health insurance ($248 billion), preferential rates for dividends and capital gains ($161 billion) and tax-free contributions to retirement savings ($137 billion). Deductions for state and local taxes ($77 billion), mortgage interest ($70 billion) and contributions to charity ($39 billion) are also among the top 10, as is the tax-free treatment of capital gains on assets transferred at death ($43 billion).

All of those breaks primarily benefit wealthy households, according to the CBO. Rounding out the top 10 are three breaks that primarily benefit low-income households: the tax-free treatment of Social Security benefits ($33 billion), the child tax credit ($57) and the earned-income tax credit ($61 billion). [MORE]