The Rich Pay Most of the Taxes, Get Half the Tax Breaks. Democrats Are Outraged at Tax Breaks.
by Gary North on May 30, 2013
The liberal Washington Post ran this headline: Richest 20 percent get half the overall savings from U.S. tax breaks, CBO says. The CBO is the Congressional Budget Office.
The story began:
- “The 10 largest breaks in the U.S. tax code 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 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 Congressional Budget Office.”
- 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 Congressional Budget Office.”
- “Democrats seized on the new analysis, saying it provides fresh
support for President Obama’s claim that limiting tax breaks for the rich
offers a more sensible path to deficit reduction than sharp cuts to
agency budgets, known as the sequester. The sequester, which took effect
March 1, will cut U.S. agency spending by roughly $42 billion through
Oct. 1.”
- “Republicans, too, welcomed the report, saying it sheds new light on
potential policy choices as lawmakers in both parties consider a
comprehensive overhaul of the tax code. While Democrats want to limit tax
breaks to generate new revenue for the government, Republicans want to
return the money to taxpayers in the form of a simpler code with lower
rates for everyone.”
What are these tax loopholes?
- “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).”
Senator Snort is not going to vote to do away with the income tax deduction for mortgage interest payments.
With ObamaCare in tatters, not ready for implementation on January 1, 2014, will Congress now abolish the tax-free income associated with corporate payments for health care insurance?
The Washington Post then mentions this politically inconvenient fact: “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.” Yes, “some” do argue this. That is because it’s true.
The Washington Post reporter then adds the obligatory “but.”
- “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.”
It’s all a matter of perspective. It all begins with a view of who owns you. The CBO assumes that the federal government owns you.
Fact: all tax laws encourage and subsidize “behaviors.” That is why Congress writes them. Congressmen want to encourage the behavior of getting special-interest groups to contribute to Congressional re-election campaigns. And let me assure you, this strategy works.
Then what does the phrase “other priorities” mean? It means government boondoggles.
I suggest this priority: cut taxes, thereby encouraging this “behavior.” Encourage taxpayers to decide what to do with more of their own money. But this priority does not appeal to Washington Post reporters . . . or to Congress.
Continue Reading on www.washingtonpost.com
http://teapartyeconomist.com/2013/05/30/the-rich-pay-most-of-the-taxes-get-half-the-tax-breaks-democrats-are-outraged/#ixzz2V57lqQVX
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