A new Congressional Budget Office report is making headlines for finding that the top 10 income and payroll tax “expenditures” – deductions, credits and other tax breaks – amount to $12 trillion over a 10-year period. That’s more than Medicare, Social Security or defense spending.
But like with Medicare, Social Security or defense spending, not all of that money is wasted or unfairly distributed. That $12 trillion includes child tax credits, mortgage deductions and health care deductions.
Nevertheless, a whopping $2 trillion of that goes to folks who make more than $450,000 a year. In other words, 17 percent of all tax breaks goes to the top 1 percent.
$2 trillion is about double the 10-year cost of the sequester.
The CBO cautions that it’s not as simple as ending a tax break to recoup that money, because ending a tax break can change people’s behavior. Still, President Obama’s proposal to cap the benefit of itemized deductions at a 28 percent rate, down from the top rate of 39.6 percent, would bring in about $500 billion, or about half a sequester.
That money is just sitting on the table.