Tax Breaks & Tax Loopholes

It’s been a roller coaster week, and it’s not over yet. Disappointing news from the Census Bureau that we didn’t make progress reducing poverty or the wage gap last year. Exciting news from the Department of Labor about a new rule that brings home care workers one giant step closer to fair pay. The threat that the House will vote later today to slash vital SNAP (Food Stamp) benefits for millions of Americans and vote tomorrow to extend the sequester for several more months. The sequester vote will include yet another effort to defund the Affordable Care Act.

But even in Congress, there are some encouraging developments. Yesterday, several Members of Congress turned out for a special game of Chutes and Ladders (with hula hoops!) to show their support for investing in early learning. And today, Senator Carl Levin (D-MI) and cosponsors Senators Sheldon Whitehouse (D-RI), Mark Begich (D-AK) and Jeanne Shaheen (D-NH) introduced the Stop Tax Haven Abuse Act to close offshore tax loopholes. Read more »

In my first Tax Day blog post, I focused on one really unfair aspect of our tax code: the wealthiest Americans often benefit more from all sorts of deductions and exclusions than middle-income taxpayers do.

But the super-rich aren’t the only ones who might be getting a better deal from the tax code than you. If you paid even a dollar of federal income tax last year, you paid more than Facebook did. And more than FedEx. And more than Southwest Airlines. Every year, these and many other large, profitable corporations manage to take advantage of loopholes and special preferences in the tax code to avoid paying their fair share of taxes; in fact, these companies often end up with a big tax rebate. Today, Citizens for Tax Justice is calling out these tax dodgers, making the rounds in D.C. with a giant mobile billboard:

Happy Tax Day, everyone! When it’s time to pay my taxes, I try hard to focus on all of the important programs and services those dollars support. (You can see exactly how your own federal income taxes are spent using this nifty Tax Receipt from the National Priorities Project.)

But I have to admit – I’m also thinking about the people who make a whole lot more money than I do and get a better deal from the tax code. The fact is, super-rich taxpayers currently benefit much more than ordinary taxpayers like me from many federal income tax deductions and exclusions. 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.

Tax Day (April 15) is nearly upon us. Maybe you’re scrambling to file, or maybe you’re happy to have a refund on the way. Whatever your feelings about your own taxes, it’s important to remember that taxes are essential to fund critical investments – everything from roads and bridges to education and life-saving scientific research.

But perhaps you’re thinking, “Wait a second. The roads where I live are crumbling, and the schools aren’t in such great shape either. And Washington just cut funding we need to improve our roads and our schools and help families who are struggling. I don’t think our tax code is working the way it should.” Well… you’re right. The tax code contains a bunch of special-interest loopholes and preferences that are used by the wealthy and big corporations to avoid paying their fair share of taxes. Some of the richest Americans pay a lower tax rate than middle-class families do, and some very profitable corporations manage to pay no federal income tax at all.   Read more »