The top ten tax deductions, credits and exclusions will keep $12 trillion out of federal government coffers over the next decade, and mostly benefit the wealthiest Americans, a Congressional Budget Office study shows.
Democrats say the study backs up President Obama’s proposals to reform tax by raising revenues through limiting the amount of tax preferences for the wealthy.
More than half of the $900 billion in tax break benefits accrued in 2013 will go to the top 20 per cent of income earners, the non-partisan CBO said.
It added that 17 per cent of the total benefits would go to the top 1 per cent of income earners – families earning $450,000 or more.
This is the same group that was hit with a tax rate hike in January.
The benefits of preferential tax rates on capital gains and dividends, a break worth $161 billion this year, go almost entirely to the wealthy, including 68 per cent to the top 1 per cent of earners.
But the study also showed that benefits for the largest of the tax preferences, the exclusion for employer-paid health benefits, worth $3.4 trillion over 10 years, are more evenly distributed, with more than half of the benefits going to the middle 60 per cent of earners.