Numbers We Should Know

A study by the non partisan CBO (Congressional Business Office) discovered that income tax breaks disproportionately benefit higher income households. It found that the top ten tax breaks, are “distributed unevenly across the income scale.” Those earning $450,000 or more, representing the top 1% of households, received more than17% of the savings in 2013. In four of the areas studied, for example, employer sponsored health insurance, capital gains on assets transferred at death, mortgage interest, and charitable contributions, the tax code benefits those in the higher income levels. The income spread was divided into five levels and taking charitable contributions as an illustration, those with the highest earnings, the highest fifth, or 84%, benefited the most. 11% of the next level benefited, 4% of the third, 1% of the second and 0% of the level representing households with the lowest earnings. Not surprisingly, mortgage interest had a similar spread. As discussions on the budget, the deficit, the debt ceiling and reforming the tax code take place, from Washington to our living rooms, these figures are something we ought to know if we want to understand what’s going on.