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Chart

Source: Washington Post

Category: Digital Media, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

15 Responses to “Who Gets the Biggest Tax Breaks?”

  1. Herman Frank says:

    Somehow, somewhere, that famous line got lost, that anchor of the American Dream, that visionary aspect of a vibrant culture, that harbinger of a social contract, that famous line from the Gettysburg address: “Government of the people, by the people, for the people, shall not perish from the Earth.”

    As they now say ……. “I’ll get the best legislation money can buy!”

    Shame on our representatives for having failed the people! Shame!

    • James Shannon says:

      Shame on “The People” for allowing tthe government to get to the point where it is clearly owned by the CentaMillionaire$ and Billionaire$!
      Tax ALL INCOME and WEALTH above $10,000,000 at 100% and we just might have a chance of surviving the corruption money has bought and paid for!

  2. Willy2 says:

    The Obama administration is aware of the size of these taxbreaks. It’s limiting the deductability for the highest tax bracket (brackets ??) in the latest Presidential Budget. Excellent first step for a major reform of the US taxcode (national sales tax, VAT, closing loopholes etc.).

    See also:
    http://www.washingtonpost.com/business/economy/richest-20-percent-get-half-the-overall-savings-from-tax-breaks-cbo-says/2013/05/29/645f75c6-c894-11e2-9245-773c0123c027_story.html
    http://www.washingtonpost.com/wp-srv/special/politics/tax-code-break-by-break/

  3. [...] Who Gets the Biggest Tax Breaks? Big Picture. You’ll never guess! [...]

  4. dow says:

    I´d like to see a more detailed break down of the tax breaks for the that highest bracket.

  5. old dog says:

    Those top 20% of earners garner slightly over 50% of the income (51.1% in 2011, according to the Census Bureau). So why wouldn’t you expect that they would also receive slightly over 50% of the benefits from tax breaks? I’m actually surprised that they didn’t receive proportionately more, considering the progressivity of the tax code and the fact that tax breaks reduce tax at the highest marginal rate. On the flip side, those top 20% pay 68% of the taxes – “a little bit more” than their “fair share.” And, as they say in the NY lottery, “you gotta play to win.” – you have to actually be paying taxes to benefit from most “tax breaks.” (Except for the EITC.)

    • bknezek says:

      Well said, old dog. Sadly, these kinds of articles are written to elicit emotional response rather than logical analysis. The very premise of the article is that the federal government is giving money away – and giving it to rich people because they’re politically favored. THE GOVERNMENT ISN’T OPRAH – giving stuff away, at best they’re letting the rich keep more of THEIR money.

      An analogous article with the opposite political leaning would be titled, “Who Gets Screwed the Most by Income Taxes: Progressive rates designed to rob the top 20%”

      In the end, the tax code is shameful, but not because it favors the rich or the poor… simply because it’s a convoluted mess of marginal rates and deductions that are either costly or time consuming with the end result of accomplishing nothing. The rich get a higher marginal rate which they offset by finding deductions and end up paying about the same effective rate as the middle earners.

  6. rd says:

    One interesting thing about not taxing Social Security that I almost never see mentioned is that Social Security(and Medicare) taxes were paid by individuals but these taxes did not reduce their AGI used to calculate their income tax. Leaving out the progressive nature of SS payout calculations, I don’t view untaxed SS benefits as a “tax break”.

    Many low income people receiving SS payments made more when they were working and so paid income taxes on the income used to pay their FICA taxes, especially since, if deducted from AGI, they would come off the top at marginal tax rate. Personally, I have paid 10s of thousands of dollars in income tax on the gross income my FICA taxes are calculated on and drawn from. I could receive tax free SS benefits with a clear conscience. However, since we are saving a lot of money (using tax deductible accounts), I expect I will be paying a fair amount of income tax on my SS payments in retirement. The parallel universe would be Roth IRAs, not deductible IRAs and 401ks.

    If we want to reduce or eliminate the big kahuna of the mortgage interest deduction, now would be the time to do it, since mortgage interest is very low. However, I am sure that the politicians will wait until interest rates rise to double digits to eliminate it.

  7. Bridget says:

    From the article:

    “Some argue that it might be reasonable for the rich to receive a large portion of the benefit from federal tax breaks because they pay an outsize share of federal taxes. According to the independent Tax Policy Center, the richest 20 percent of households paid nearly 70 percent of federal taxes last year.”

    Followed by the complete non sequitur that the rich would make charitable deductions, take on mortgage debt, and obtain health insurance without tax breaks. The fact is that those who do not pay taxes will not benefit in any large measure from tax breaks.

    . I happen to favor the elimination of all tax breaks, with the possible exception of the charitable deduction, because there are very good reasons to do so. But distorting the facts about who is paying taxes and who is getting breaks is not the foundation of a reasoned argument for eliminating breaks.

    • The charitable deduction has encouraged some very sketchy outfits who spend 90+% of their monies on “Admin” — i find these to be a waste of taxpayers money — what do we do about them?

      (So you like everyone else had a favorite tax deduction also!)

      • NewBob88 says:

        I believe that all charities should pay income taxes at the existing corporate rates. Why should they be exempt from paying taxes when they receive the benefits afforded all America institutions. Its time to end the “sham charity” tax shelters where a rich family can sets up their “Black Sheep” son as the president of a newly formed charity, and then makes donations to this charity for which they get a tax deduction and the son then pays himself 90% of this donation as his salary and gives the other 10% to his religious institution or another friends sham charity. Taxing all charities will end this. The real charities will still get donations from their thoughtful patrons. Shame on the people who do this, and shame on the tax code that allows this to happen.

  8. constantnormal says:

    … partitioning into quintiles grossly smothers the degree of economic inequality … the hyperbola would be much more pronounced if incomes were partitioned by 5% instead of 20%, and still more so if 1% buckets were employed … and focusing on incomes instead of assets further hides the economic inequality, because as assets rise, and the unearned income increases, people have the ability to take only as much taxable income as they desire, leaving the rest to grow in tax-advantaged ways … there is a whole other set of tax breaks that apply to assets — such as the ability to carry over gains on assets (stocks, bonds, property) from year to year completely untaxed until they are cashed in, at which time huge tax benefits come into play … a tax policy that ignores assets is by nature regressive.

    • Sounds intertesting — can you dig up a chart showing that 5% breakdown?

      Thanks!

      • constantnormal says:

        Sadly, I cannot. The closest I can come (and for 2011, not 2013 as is the chart here) is a chart in this piece by Catherine Rampell in the NYT Economic blog that illustrates the hyperbolic nature of the income curve with much more precision. When one collapses the points in the upper 20% into a single bar, one loses the visual impact of that rapid escalation, and the taxes paid by the uppermost incomes more than compensate for the lower taxes paid by the bottom half of that quintile (the slope of the increase being MUCH higher than 1:1 at the upper end of the curve, and MUCH lower than 1:1 in most of that quintile), which serves to give the impression that the top 20% are overly burdened by taxes.

        BTW, to those who perceive me as a raving socialist, because I note that asset increases receive hugely favorable tax policies (i.e., they are not taxed as they grow, only at distribution time, at which point rather substantial tax breaks come into play) … that’s not the case at all. I get most of my income from assets these days (early retiree, not yet willing/needing to draw Social Security), and take every tax break I can get. Warren Buffett understands, and he also takes every tax break he can get. Individual actions will not mend a broken system.

        A capitalist society REQUIRES some degree of economic inequality to function, just as a heat engine relies upon temperature differentials to perform work. But in a heat engine, if the temperature differentials get too great, bad things happen (holes in pistons, breakdown of lubricating oil, seized engines, etc) — and it is no different in economies. I believe that we are getting close to “burning holes in our economic pistons”.

        It’s easy to criticize the ones at the bottom (that would be the bottom half, these days) that pay little or no income taxes … until you think about “income” as “post-living-expenses income”, and then you quickly realize that ANY tax rate times zero results in zero taxes. Fools that want to crank up the taxes on the bottom half should review the economic history of late-18th century France, when the nobility (who lived large and paid for none of it) cranked up taxes on the peasants for the final time, and that economy (and society) seized up.