Wealthy win lion’s share of major tax breaks, CBO says

WASHINGTON >> Wealthier households benefit significantly more than lower earners from big tax breaks such as deductions for mortgage interest and charitable giving, the government said in a new study.

More than half the benefits of 10 major tax breaks go to the one-fifth of U.S. households at the top of the income scale, according to the Congressional Budget Office. The top 1 percent of earners reaps 17 percent of these tax breaks, which also include preferential treatment of investment income and the deduction for sales and income taxes paid to state and local governments.

Other breaks, such as the per-child tax credit of up to $1,000 and the earned-income tax credit claimed by low-income households, generally benefit those in lower income ranges. The study illustrates the challenges and trade-offs facing lawmakers as they consider overhauling complex tax laws by limiting or eliminating tax breaks and deductions in order to lower income tax rates for everybody.