CBO: Nation’s Wealthiest Benefit from Most Tax Breaks

By FOXBusiness

A new report from the Congressional Budget Office says the 10 major tax deductions, credits and exclusions for individuals are distributed unevenly among income levels, with just over half of an estimated $900 billion in savings for fiscal year 2013 headed to the top 20% of earners.

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The tax expenditures are broken down into four groups: exclusions from taxable income, itemized deductions, preferential tax rates and tax credits.

The estimated $900 billion in tax savings equals 5.7% of gross domestic product for the fiscal year 2013, the non-partisan CBO reports. These savings will account for roughly two-thirds of the total budgetary effects of all tax expenditures for the year as well.

The CBO estimates 13% of these tax breaks will go to households in the middle earner category and 8% will benefit the lowest earners in the nation.

Jason Riley, editorial board member for The Wall Street Journal, says the CBO report reflects the “steeply progressive tax system” in America.

“When you have the top 20% of earners sending Washington 70% of their income taxes, and the top 1% paying 37% [of income in taxes] when you have almost 50% of Americans paying no income taxes this is the inevitable result. When taxes are cut, higher earners will benefit,” Riley told FOX Business.

Lawmakers have been working to reform the nation’s tax code to help reduce the federal budget, but Riley is unsure on just how productive Congress and the White House can be in formalizing changes.

“Traditionally, tax reform has meant lower rates in return for closing loopholes. This president has already raised taxes tremendously but has kept in place carve-outs for industries that he favors. He wants it both ways,” he says.

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