That’s quite literally the message, given that the teaser on the front page reads, “90 Percent of Tax Breaks Go to Individuals: Value of Individual Tax Breaks Rise Seven Times Faster Than Corporations.” But the article by Gregory Korte (9/16/13) delivers that message by taking a curious view of the research that it is based on.
In USA Today‘s telling, the $1.2 trillion in tax expenditures (deductions and credits) are
not all corporate tax giveaways and special-interest handouts: More than 90 percent of federal tax breaks go to individual taxpayers.
Now you might find it surprising that you were getting all these gifts. But you have to understand what they are. As Korte reports:
Non-taxable Social Security benefits will save retired and disabled people $32.9 billion, up 59 percent since 2009. Employees will save $212.8 billion because their employer-provided health benefits aren’t taxed, a 47 percent increase from 2009.
Social Security is in theory a program that puts some of your income–which you have already paid taxes on–into an insurance fund that you can draw on if you live to retirement age; it’s not clear that allowing (some of) this return of your own money qualifies as a “giveaway.”
And the fact that your boss doesn’t pay taxes on the cost of your healthcare premiums (which went up around 41 percent from 2003 to 2009, according to one study) probably doesn’t feel like much of a perk to most workers. It’s worth noting that in most industrialized countries, health insurance is considered a government obligation to the population in general, not a special benefit to particular individuals.
The piece is “balanced” in the way that mainstream journalism so often can be–in other words, not in a good way. William McBride of the “business-oriented” Tax Foundation is of the view that, in the paper’s paraphrase, “some popular low-income tax benefits like the earned income tax credit and the child tax credit are, in some ways, worse than welfare spending.”
That point of view–that the poor are taking advantage of the system–is the “balance” for Steve Wamhoff, legislative director for the progressive Citizens for Tax Justice, who argues that we’re focusing on the wrong tax breaks: “If you have a spending program and 68 percent of that money goes to the richest 1 percent, most people would think that’s pretty bad.”
Now, that comment is interesting, because it does a better job of conveying one of the main points of the research that forms the basis for the USA Today: Yes, tax expenditures are broadly felt, but the benefits tend to disproportionally flow upwards.
That research, by the National Priorities Project, finds that there are over $1 trillion in tax breaks for individuals,
but all individuals do not benefit equally. Ten major tax breaks that together total more than $750 billion in tax savings in 2013 are tilted heavily in favor of the top income earners; according to the Congressional Budget Office, 17 percent of the benefits from these major tax breaks go to the top 1 percent of households.
An accompanying graph shows how the playing field is tilted; the lower rate on capital gains and dividends, for instance, amounts to $83 billion a year, and 68 percent of those benefits go to the top 1 percent.
That’s a very different message than saying that everyone’s gaming the system–gobbling up more of the “goodies” than corporations. The truth is that the most important breaks are going to those who need them the least.