While Sen. Carl Levin has focused intently on
corporations that avoid taxes by hiding profits and other financial assets
overseas, his brother, Congressman Sandy Levin, is warning against putting all
tax deductions on the table when discussing tax reform.
corporations that avoid taxes by hiding profits and other financial assets
overseas, his brother, Congressman Sandy Levin, is warning against putting all
tax deductions on the table when discussing tax reform.
The top-ranking Democrat
on the House Ways and Means Committee, Levin has issued a statement in response
to the Congressional Budget Office’s new
report on the major tax expenditures in the IRS code:
on the House Ways and Means Committee, Levin has issued a statement in response
to the Congressional Budget Office’s new
report on the major tax expenditures in the IRS code:
“The CBO report
underscores the need to go beyond the rhetoric of lowering tax rates without
indication of how that would be achieved or the implications for economic
growth and tax equity. The report confirms distributional analyses that the
Joint Committee on Taxation provided to Ways and Means Democrats two years ago
that showed how some tax preferences decisively benefit only the very wealthy
while others are significant for middle-income taxpayers. The preferences that
benefit the very wealthy highlight the ability to obtain the needed revenues to
address the (budget) sequester and achieve a balanced approach to tax reform.”
underscores the need to go beyond the rhetoric of lowering tax rates without
indication of how that would be achieved or the implications for economic
growth and tax equity. The report confirms distributional analyses that the
Joint Committee on Taxation provided to Ways and Means Democrats two years ago
that showed how some tax preferences decisively benefit only the very wealthy
while others are significant for middle-income taxpayers. The preferences that
benefit the very wealthy highlight the ability to obtain the needed revenues to
address the (budget) sequester and achieve a balanced approach to tax reform.”
Among the CBO report’s
key findings:
key findings:
Employer-Sponsored Health Insurance
“The exclusion of
employers’ contributions for health care, health insurance premiums, and
long-term-care insurance premiums for their employees is the single largest tax
expenditure in the individual income tax code; it is estimated to reduce tax
liabilities by $260 billion (or $140 billion excluding the effects on payroll
taxes) in 2013.” CBO estimates that 66 percent of the benefit accrues to the
bottom 80 percent of the income distribution.
employers’ contributions for health care, health insurance premiums, and
long-term-care insurance premiums for their employees is the single largest tax
expenditure in the individual income tax code; it is estimated to reduce tax
liabilities by $260 billion (or $140 billion excluding the effects on payroll
taxes) in 2013.” CBO estimates that 66 percent of the benefit accrues to the
bottom 80 percent of the income distribution.
Home Mortgage Interest
“The deduction for
interest paid on mortgages for owner-occupied residences, which CBO estimates
will equal $70 billion in 2013, is the [second]-largest itemized deduction. It
is also the least tilted toward the top of the income distribution, in part
because the law caps the maximum mortgage amount on which interest payments can
be deducted (generally limited to the first $1 million of mortgage debt) and in
part because mortgage debt rises less rapidly with income than do other
deductible expenses.”
interest paid on mortgages for owner-occupied residences, which CBO estimates
will equal $70 billion in 2013, is the [second]-largest itemized deduction. It
is also the least tilted toward the top of the income distribution, in part
because the law caps the maximum mortgage amount on which interest payments can
be deducted (generally limited to the first $1 million of mortgage debt) and in
part because mortgage debt rises less rapidly with income than do other
deductible expenses.”
Capital Gains and Dividends
“Virtually all of the
benefits from the preferential tax rates on those sources of income accrue to
the top quintile (top one-fifth) of households. The tax expenditure for that
group will equal 1.7 percent of their after-tax income in 2013, CBO estimates.
Within the top quintile, the tax expenditure is heavily concentrated in the top
1 percent of households, because a large share of investment income in the form
of capital gains realizations and dividends accrues to those taxpayers. The top
1 percent of households will receive more than two-thirds of the total value of
the benefit in 2013, CBO estimates, which will equal 5.3 percent of their
after-tax income.”
benefits from the preferential tax rates on those sources of income accrue to
the top quintile (top one-fifth) of households. The tax expenditure for that
group will equal 1.7 percent of their after-tax income in 2013, CBO estimates.
Within the top quintile, the tax expenditure is heavily concentrated in the top
1 percent of households, because a large share of investment income in the form
of capital gains realizations and dividends accrues to those taxpayers. The top
1 percent of households will receive more than two-thirds of the total value of
the benefit in 2013, CBO estimates, which will equal 5.3 percent of their
after-tax income.”
