More Federal Tax Breaks Go to Individual Taxpayers

Last updated on September 16, 2022

More than 90 percent of federal tax breaks go to individual filers. According to government records, the total amount of tax breaks, including deductions, credits, exclusions and other breaks contribute to government expenditures of nearly $1.2 trillion a year. Post Crescent tracks the steep hike in the value of individual tax breaks.

“Since the government started accounting for tax preferences in 1974, the value of individual tax breaks has increased seven times faster than that of corporations,” according to a USA Today analysis of tax expenditure data collected by the National Priorities Project.

“One of the things that we found — and it’s perhaps the underlying reason why the tax conversation is so complicated — is that the tax code really does cut across people of all income brackets in this country. Every income group gets some kind of tax expenditure,” said Jo Comerford, the group’s director.

“It flies in the face of the myth that tax expenditures return only to corporations, when the fact is they return by and large to individuals,” Comerford elaborates, “And many of the most popular individual tax breaks are among the fastest-growing. Individual taxpayers are likely to save a total of $45.8 billion in 2014 because of a provision exempting home sales from capital gains taxes — nearly double the amount from five years before.”

Economic factors, including increased health care costs and 401(k) contributions are quoted as the reasons for the growth in individual tax breaks. There has also been talk of reducing government expenditures in tax breaks. Post Crescent elaborates:

“Everybody wants to raise revenue by getting rid of tax expenditures, but I think people are focused on the wrong ones,” said Steve Wamhoff, legislative director of Citizens for Tax Justice. “If you have a spending program and 68 percent of that money goes to the richest 1 percent, most people would think that’s pretty bad.”

The National Priorities Project, a Massachusetts-based nonprofit group that researches federal budget issues, collected cost estimates for 296 tax expenditures dating to 1974, when the government first started disclosing them in annual budget documents.

Becky Sweger, the group’s director of data and technology, said most Americans don’t think of tax breaks as spending — partly because some of them are breaks they never see, like the exclusion of employer health plans.

“I used to think, ‘Who gets all these horrible tax breaks?’ And when I charted those, I saw the top three are me. I get all of those,” she said.

Individual taxpayers are enjoying the most from tax breaks at present. The government expenditure of nearly $1.2 trillion a year on tax breaks provides the most benefits to individual taxpayers. It is a revelation and something to rejoice about.