What Extra Tax Breaks for the Richest Americans Cost Women and Families

April 26, 2013

 

Extra Tax Breaks
Many programs vital to women and their families are being cut. Yet, at the same time, our nation is spending billions of dollars each year to continue unfair tax breaks for large corporations and very wealthy individuals.   

The highest-income taxpayers currently benefit much more than middle-income taxpayers do from many deductions and exclusions in the tax code. For example, for a wealthy taxpayer in the top tax bracket (39.6 percent) who pays $10,000 in mortgage interest, the mortgage interest deduction is worth $3,960. For a middle-income taxpayer in the 15 percent tax bracket who pays the same $10,000 in mortgage interest, the deduction is worth only $1,500.

President Obama has proposed limiting extra tax deductions and certain exclusions for the richest American households to 28 percent – meaning that very wealthy taxpayers in the highest tax brackets would get the same tax benefit from deductions and exclusions as a household in the 28 percent tax bracket.  This policy would make the tax code fairer and raise needed revenue. 

Limiting extra tax deductions for the richest Americans, as the President has proposed, would raise about $52.9 billion on average per year.[1] That’s more than the federal government spends annually on all of these programs serving lower-income individuals and families:

  • The Low-Income Home Energy Assistance Program (LIHEAP), which helps low-income households afford to heat and cool their homes in extreme weather conditions. ($3.5 billion/year)[2]  
  • The Supplemental Nutrition Assistance Program for Women, Infants and Children (WIC), which provides nutritious food to low-income pregnant women, new mothers, and young children.  ($6.7 billion/year)[3] 
  • Temporary Assistance for Needy Families (TANF), which funds cash assistance, work support, and other services for low-income children and parents.  ($17.4 billion/year)[4]
  • The Housing Choice Voucher Program (also known as Section 8 Tenant-Based Rental Assistance), which helps low-income families afford rental housing. ($19.0 billion/year)[5] 


[1] U.S. Dep’t of the Treasury, General Explanations of the Administration’s FY 2014 Revenue Proposals, Tables of Revenue Estimates, at 4 (Apr. 2013), available at http://www.treasury.gov/resource-center/tax-policy/Documents/General-Explanations-FY2014-Tables.pdf. NWLC calculated average one-year savings based on ten-year savings estimate of $529.26 billion.   

[2] U.S. Dep’t of Health & Human Serv., Admin. for Children & Families FY 2014 Budget, at 27 (Apr. 2013), available at https://www.acf.hhs.gov/sites/default/files/olab/fy_2014_cj_final.pdf. Program budgets are FY 2013 estimates, pre-sequestration.  

[3] U.S. Dep’t of Agriculture, FY 2014 Budget Summary & Annual Performance Plan, at 53 (Apr. 2013), available at http://www.obpa.usda.gov/budsum/FY14budsum.pdf.   

[4] U.S.  Dep’t of Health & Human Serv., supra note 2, at 285.  TANF is exempt from sequestration.

[5] Exec. Office of the President, Budget of the U.S. Gov­ernment, FY 2014: Appendix, Dep’t of Housing & Urban Dev., at 543-45 (Apr. 2013), available at http://www.gpo.gov/fdsys/pkg/BUDGET-2014-APP/pdf/BUDGET-2014-APP-1-12.pdf.

 

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