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Following the money: Tax breaks

Earlier this year, Need to Know presented “A tale of four tax returns” — a profile of four New Jersey residents with dramatically different incomes which illustrated how current tax regulations disproportionately benefit some Americans.

Last week the Congressional Budget Office released a new study on how tax “breaks” play out in the American economy with a report titled “The Distribution of Major Tax Expenditures in the Individual Income Tax System.”

The report looks at how tax policies and exemptions like the Earned Income Tax Credit, the lower rate on capital gains, the mortgage deduction, and others benefit individuals by economic percentile. The CBO release supports our report that the middle classes benefit least from our current tax system.

CBO tax report charts, M1y 29, 2013

These charts by the Congressional Budget Office show how tax expenditures are distributed, first in terms of total dollars and then as a percentage of after-tax income. (Congressional Budget Office / May 29, 2013)

When the study was reported across a variety of media outlets, the headlines differed dramatically. Read the CBO report and see what you think.

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