Let’s keep tax code benefits in perspective 

This is from the Washington Post Editorial Board 4-22-15

If Ms. Clinton wants to get substantive, all she needs to do is look at the income tax code. Of the 10 largest tax expenditures, only two — the $70 billion-per-year earned-income tax credit and the $57 billion child tax credit — favor the poor. The others disproportionately benefit the top 20 percent of earners, according to a Congressional Budget Office report. For example, the top quintile captures 73 percent of the mortgage interest deduction; 80 percent of the state and local taxes deduction; 84 percent of the charitable deduction; and 93 percent of the preferential rate on capital gains and dividends. This last one confers 68 percent of its benefits on the top 1 percent of taxpayers.

Just so you have an accurate frame of reference, the mean household income of the top 20% is $181,105 according to the Tax Policy Institute 

According to the Tax Foundation, the lowest 50% of taxpayers pay 2.89% of all federal income taxes (2011 data).  While the top 25% paid 85.6% of all taxes.

Also keep in mind that the largest revenue loser for the government is tax-free employer contributions toward health insurance, something that benefits average working Americans, especially union members, far more than the wealthy.

Given the above, why wouldn’t the higher income Americans who are paying most of the taxes, spending the most on interest, make the most charitable donations receive the benefits of the tax code? Remember, we are not talking about millionaires and billionaires, we are talking about some pretty average, educated, and hard-working union member two income families.

And let’s not forget the alternate minimum tax (AMT) which limits deduction such as state and local income taxes and property taxes; child-tax credits; and home-equity loan interest. This additional tax impacts those of us living in high tax states which points out the danger of drawing too broad conclusions about tax fairness. And you don’t have to be wealthy; the AMT hits you if your family income is $83,400 (2015). 

I would agree, however, that we need to rethink the need for a lower capital gains and dividend income tax rates for the very highest earners, perhaps the top 5%.

So, what do you say? Do we need to change the tax code to make it less fair to those who pay most of the taxes?