Home / Taxes / The Rich Pay Most of the Taxes, Get Half the Tax Breaks. Democrats Are Outraged at Tax Breaks.
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The Rich Pay Most of the Taxes, Get Half the Tax Breaks. Democrats Are Outraged at Tax Breaks.

Written 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.”

We know what’s coming.

“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.”

Obama originally promoted the sequester. Now he is pretending the Reoublicans did it. But he signed the bill into law in 2011.

“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.”

A simpler tax code? That’ll be the day!

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).”

Do you think Congress, which wrote the tax code, will soon alienate all the PAC donors who use these exemptions? I don’t think so.

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.”

Got that? A tax break — taking less of your money — is a government subsidy. And it surely is . . . if you begin with the presumption that the federal government owns 100% of everyone’s income. Then when it lets voters keep some of their income, this is a government subsidy to you.

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

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19 thoughts on “The Rich Pay Most of the Taxes, Get Half the Tax Breaks. Democrats Are Outraged at Tax Breaks.

  1. Only CPAs and tax attorneys like our tax code, yet it doesn't get overhauled. Should be replaced with a simple tax.

  2. Phillip the Bruce says:

    Better idea – replace it with NOTHING, and slash spending.

  3. The rich are also the ones who can afford NOT to have tax breaks. If you're getting a break on your taxes, then guess what: you're not paying most of the taxes anymore.

    Idiots.

  4. How do you satisfy a “liberal” when it comes to taxes? A Flat Tax, a Fair Tax or a Sales Tax would be even more irksome an “egalitarian.” Even though, in any case, the rich would wind up paying more than everyone else. So, Gary, what else is new?

  5. Seymour Kleerly says:

    The income/wealth gap needs to close ASAP. It's counterproductive, immoral and dangerous. Conservatives need to understand that GREED is not Good!

  6. "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."

    ….or to Shane.

  7. Actually, David, I support the FairTax, so fuck off. 🙂

    But if we're going to have a tax system like we do currently, corporations pulling in millions and billions of dollars in profits should absolutely pay more in taxes.

  8. And obviously the people downvoting your statement think greed is absolutely great, and that is what's wrong with our country. Selfishness and greed.

    Apparently they know nothing of the 7 deadly sins.

  9. "Actually, David, I support the FairTax,"

    That is almost as stupid as your laughably stupid claim that rich people who paid 70% last year somehow magically didn't pay most of the taxes because they got tax breaks. Shane, you don't even understand basic math, why should we take you seriously? You can't even type a coherent sentence.

    "so fuck off. 🙂 "

    Smile, once more Shane's impotent commands are laughed at and ignored.

    "But if we're going to have a tax system like we do currently, corporations pulling in millions and billions of dollars in profits should absolutely pay more in taxes."

    And Shane, in yet his third act of stupidity, admits I was right all along. Encouraging taxpayers, which does include corporations, to decide what to do with more of their money, does not appeal to Shane.

  10. Michael says:

    Actually Greg, I am a CPA and I think that the tax code is a joke, as do most other CPA's that I know.

  11. Burt Fisher says:

    How dare you tell me how I should spend my money! Or to tell me what I can or cannot afford. I have a clue for you, Shane. Instead of spending your time on this opinion area of the web site, you should go back to your office and work some overtime and give all of that money to the government.

    You will notice that your opinion in this matter was not solicited. I just budgeted your money for you, thus saving you the effort.

    How did that feel?

  12. Seymour Kleerly says:

    I could post that Liberals love puppies and I'd get voted down on this 98% Right Wing site.! I honestly don't even look.

  13. Re: Seymour Kleerly,
    — The income/wealth gap needs to close ASAP. It's counterproductive, immoral and dangerous. —

    Why is it "counterproductive", "immoral" and "dangerous"? If there are people with enough capital to invest, then it cannot be "counterPRODUCTIVE" to have rich people; if the income they received came from voluntary trade (i.e. not stealing) then it cannot be immoral; and the danger only comes from the demagoguing by hatemongers and political opportunits and the willingness of people to be convinced by appeals to envy.

    — Conservatives need to understand that GREED is not Good! —

    This is nothing more than a ridiculous and shallow platitude. Everybody is greedy. What you should mind is your respect for other people's property and lives.

  14. Re: Shane,
    — And obviously the people downvoting your statement think greed is absolutely great, —

    You can only assume what other people think, but I can tell you without being wrong: Greed IS great. Greed is what makes us strive to improve our lot. Excessive greed can lead to errors and too much risk-taking, but that is what risk-aversion is for. As we are all greedy in some degree, we are also risk-averse in some degree.

    — Apparently they know nothing of the 7 deadly sins. —

    You're certainly keen on obviating the worst of all deadly sins, you and your new pal Seymour Kleerly: The sin of Envy.

  15. Re: Shane,
    — The rich are also the ones who can afford NOT to have tax breaks. —

    Indeed? I guess you have a special inight on people's minds that you can preume to know what other people can or cannot afford.

    — If you're getting a break on your taxes, then guess what: you're not paying most of the taxes anymore. —

    Besides your pride and arrogance, we have a lack of knowledge in basic math to add to your list of lovely virtues.

    Even if they pay a lower rate than the government could impose, the rich STILL pay most of the taxes by PROPORTION.

  16. Seymour Kleerly says:

    Nice try in your sad defense of GREED! You couldn't pay me to drive a Mercedez or live in a mansion. Did Christ suffer from envy?

  17. Seymour Kleerly says:

    Then why did Christ spend every day telling the RICH to share their wealth or forget about heaven?

  18. Bob Marshall says:

    Government data shows that the top 1% pay about 40% of all federal taxes. The top 10% pay 70%. About 50% pay no federal taxes and 20% pay no taxes at all.

  19. Bob Echola says:

    Why don't we just pay a sales tax that would cover all people who buy anything?