Thursday, June 21, 2018
Business

Big tax breaks benefit wealthy more than lower earners, study says

WASHINGTON — Wealthier households benefit significantly more than lower earners from big tax breaks such as deductions for mortgage interest and charitable giving, the government said in a study Wednesday.

More than half the benefits of 10 major tax breaks go to the one-fifth of U.S. households at the top of the income scale, according to the Congressional Budget Office.

The top 1 percent of earners reaps 17 percent of these tax breaks, which also include preferential treatment of investment income and the deduction for sales and income taxes paid to state and local governments. The study said that the top one-fifth of households claim 81 percent of the benefits of itemized deductions.

Other breaks, such as the per-child tax credit of up to $1,000 and the earned income tax credit claimed by low-income households, generally benefit those in lower income ranges.

The report shows how lower and middle-income groups benefits from tax breaks. But once income is taken into account, the benefits are felt more equitably.

For example, tax breaks contribute almost 8 percent of after-tax income for couples making between $54,000 and $78,000. Such breaks represent 9.4 percent of income for couples making over $115,000 a year. Households in the bottom fifth, meaning couples making up to $35,000, receive 11.7 percent of their after-tax income from the breaks, about half of which is due to the earned income tax credit.

The study illustrates the challenges and tradeoffs facing lawmakers as they consider overhauling complex U.S. tax laws by limiting or eliminating tax breaks and deductions in order to lower income tax rates for everybody.

The report was ordered by Rep. Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee.

The report "shows that tax breaks are skewed in favor of the top 1 percent of Americans at the expense of other priorities," Van Hollen said. "It's clear that we can limit unproductive and excessive tax preferences for the very wealthy as part of a plan to reduce the long-term deficit and promote long-term economic growth."

Democrats have proposed closing some tax breaks and devoting some of the money to reversing across-the-board spending cuts known as sequestration. The cuts began taking effect in March after Washington failed to reach agreement on tax increases and alternate spending cuts to replace them.

"The preferences that benefit the very wealthy highlight the ability to obtain the needed revenues to address the sequester and achieve a balanced approach to tax reform," said Rep. Sander Levin of Michigan, the top Democrat on the tax-writing Ways and Means Committee.

President Barack Obama has proposed to cap the rate at which wealthier households can reap savings from itemized deductions at 28 percent instead of 39.6 percent, the new top tax bracket imposed in a January tax deal.

Comments
Orlando airport first to scan faces of U.S. citizens on international flights

Orlando airport first to scan faces of U.S. citizens on international flights

ORLANDO — Florida’s busiest airport is becoming the first in the nation to require a face scan of passengers on all arriving and departing international flights, including U.S. citizens, according to officials there. The expected announcement Thursda...
Updated: 29 minutes ago
Days after buying Time Warner, AT&T launches new TV service

Days after buying Time Warner, AT&T launches new TV service

NEW YORK — AT&T is launching a new streaming service incorporating television networks from the Time Warner company it just bought. The WatchTV service, a cable-like package of more than 30 TV channels delivered over the internet, is an example of th...
Updated: 1 hour ago
Tampa tech firm Newgentek hiring 20 following expansion

Tampa tech firm Newgentek hiring 20 following expansion

TAMPA — Information technology company Newgentek plans to hire 20 new employees over the next two years following an expansion of its Tampa headquarters."In the last 90 days, the Newgentek team has grown 24 percent and is now operating at 80 percent ...
Published: 06/21/18
A tight supply cuts into Tampa Bay home sales while prices keep rising

A tight supply cuts into Tampa Bay home sales while prices keep rising

Tampa Bay’s two largest counties showed anemic home sales in May as prices continued to rise due to a tight supply. In Pinellas, sales of single-family home plunged nearly 12 percent from the previous May, the second-worst showing in a year. P...
Updated: 3 hours ago
Could Lucky’s Market move in to Clearwater’s old Albertsons?

Could Lucky’s Market move in to Clearwater’s old Albertsons?

Lucky’s Market is considering a move in to the old Albertsons box space in Clearwater, according to preliminary plans filed with the city. Lucky’s master broker, Rick Lewellyn, was listed on an agenda as discussing renovating the existing property wi...
Updated: 3 hours ago
Passengers on fatal Southwest flight sue airline and manufacturers of plane and engine

Passengers on fatal Southwest flight sue airline and manufacturers of plane and engine

Eight passengers who were aboard a Southwest Airlines flight that was forced to make an emergency landing in Philadelphia after one of its engines blew apart filed suit Wednesday against the airline, Boeing and the companies that manufactured the eng...
Updated: 11 hours ago
Former employee sued by Tesla says he was a whistleblower

Former employee sued by Tesla says he was a whistleblower

Tesla sued a former employee Wednesday, accusing the man of hacking the automaker’s computer systems and stealing company secrets, shedding light on what chief Elon Musk had suggested was the work of a secretive internal saboteur.But the employee, Ma...
Updated: 11 hours ago
Seminole Heights restaurant Mortar & Pestle files for bankruptcy reorganization

Seminole Heights restaurant Mortar & Pestle files for bankruptcy reorganization

TAMPA — Mortar & Pestle, a fledgling Seminole Heights eatery with a mom-and-pop pharmacy theme, has filed for Chapter 11 bankruptcy reorganization. Seacoast Bank was listed as the creditor with the largest unsecured claim: $1.4 million.The restaurant...
Published: 06/20/18
Developer proposes Sprouts Farmers Market for Land O’Lakes

Developer proposes Sprouts Farmers Market for Land O’Lakes

LAND O’LAKES – A Sarasota developer is proposing to turn a vacant Winn-Dixie store in central Pasco into a Sprouts Farmers Market or similar specialty grocer.Benderson Development filed preliminary plans Monday with Pasco County to redevelop the form...
Published: 06/20/18
Clearwater’s Clegg Insurance Group buys Advanced Insurance Brokerage

Clearwater’s Clegg Insurance Group buys Advanced Insurance Brokerage

CLEARWATER - Clegg Insurance Group of Clearwater announced on Wednesday it has bought Brandon-based Advanced Insurance Brokerage.The merger creates a firm with more than 2,000 customers and more than $10 million in annual premiums. Terms were not dis...
Published: 06/20/18