Real Villain of Tax Breaks: Middle Class

Corporations account for just 8% of tax breaks
By Mark Russell,  Newser Staff
Posted Sep 18, 2011 8:02 AM CDT
Real Villain of Tax Breaks: Middle Class
Tax breaks to families, not corporations, dominate the federal budget and will have to be cut to reduce the deficit, say many economists.   (Shutterstock)

Tax loopholes and write-offs for corporate jets and special interests may fill political talking points, but tax breaks for families—particularly the middle-class families that President Obama says he wants to protect—far exceed corporate giveaways, reports the Washington Post. In fact, corporations accounted for just 8% of $1.08 trillion in federal tax breaks last year (and corporate jets accounted for just 0.03%), while the middle class scarfed up the majority of the rest, in tax breaks that have doubled over the past 25 years. “The big money is in the middle-class subsidies,” says one economist. “You’re not going to balance the budget by eliminating ethanol credits. You have to go after things that really matter to a lot of people.”

With Republicans so opposed to expanding government, new tax breaks have been the preferred way to introduce new government programs for the past generation—from Bill Clinton's higher-education credits to George W. Bush's Victims of Terrorism Tax Relief Act and Obama's Making Work Pay credit. “Politically, it was easier to get tax cuts dedicated to a purpose than to get spending dedicated to the same purpose,” says Larry Summers. But increasingly, analysts say that "sacred tax cows" will have to be cut to tame the debt. “There’s just no other way to make the numbers work," said one tax expert. (More national debt stories.)

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