- the mortgage interest deduction;
- the property tax deduction;
- the earned income tax credit;
- the child credit; and,
- the charitable deduction.
According to the Congressional Budget Office (CBO), the federal income tax is very progressive, meaning "the tax burden rises as income rises." Even so, CBO data also indicate that high-income and low-income filers claim large tax deductions, while middle-income taxpayers claim smaller deductions.
"There you have it," the liberals cry out. "The 1% benefit more than the majority of Americans."
Not so, according to an analysis conducted by Michael Schuyler of the Tax Foundation:
- Yes, high income earners take advantage of and receive more tax expenditures. They also pay a much larger amount of the federal income tax. The top 25% receives 50.6% of deductions, but pays 94.1% of all individual income taxes.
- The bottom 25% receives 7.7% of deductions while paying -6.6% of all individual income taxes. Yes, that is a negative sign, meaning the bottom 25% receives more than it pays, due to refundable tax credits.
So, liberals decry the 1% who, the liberals claim, are using loopholes to escape paying their fair share of federal income taxes and should pay more taxes. Yet, the 1% are doing precisely what the law allows.
The simple fact is that the federal income tax code is already very progressive. The artful use of the data concerning those legal deductions to suggest that the federal income tax code isn't already very progressive is nothing but a clever deception. It's meant to deflect attention away from the facts so as to incite class warfare and divide people to the end of promoting greater income redistribution.
Let the discussion begin...
To read Michael Schuyler analysis, click on the following link:
"Baked In the Cake: Why the Progressivity of the Income Tax Isn't Visible in the Distribution of Tax Expenditures."