Study Shows Wealthy Benefit Most from US Tax Subsidies

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Billions of dollars in U.S. tax breaks to encourage home ownership, retirement savings, business start-ups and education mostly benefit top income earners and do little to help low- and middle-income people build wealth, a report released Wednesday said.

The U.S. government spent nearly $400 billion, mostly through tax breaks, in 2009 to promote home ownership and other wealth-building strategies and more than half of that benefited the wealthiest 5 percent of taxpayers, said the study sponsored by the nonprofit Annie E. Casey Foundation and the Corporation for Enterprise Development (CFED).

The report calls these policies "upside down" and recommends redirecting wealth-building incentives to help more middle- and lower-income people save and build assets. With record deficits and tight budgets dominating the political landscape, CFED President Andrea Levere said the report was intended to help policymakers fine-tune some of these tax breaks to get the biggest benefit for the economy.

"We're trying to be fiscally responsible, the deficit is going to frame our politics for many years to come, but at the same time if you don't invest in the future, you don't have one," she said in an interview.

Levere said the group will submit the report to President Barack Obama's fiscal commission which is to recommend ways to reduce the $1.3 trillion deficit and slow the growth of the nation's debt which now tops $13 trillion.

The commission, which is looking at these and other so-called tax expenditures as well as direct spending, is to report its recommendations in December.

Read more:  http://www.cnbc.com/id/39309659

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