Individual Taxpayers & Tax Breaks
Last updated on September 16, 2022
It is a misconception that corporations get most out of tax breaks. It is individual taxpayers that enjoy the benefits of tax breaks the most. The government keeps an account of tax preferences, which tracks the value of individual tax breaks.
Individual taxpayers receive many tax credits, deductions, exemptions, premiums and tax loopholes, including tax exempted retirement plan contributions, exclusion of employer contributions for medical insurance premiums and medical care, the mortgage interest deduction, deductions for charitable contributions, Social Security and veterans’ benefits, and exemptions on interest for tax-exempt state and local government bonds.
The government spends nearly $1.2 trillion a year on tax breaks. Many contend that reducing the number of tax breaks will also help reduce government spending. Experts suggest that eliminating tax breaks will not lead to the increase in government revenue, but changes in the behavior of taxpayers will affect the level of revenue increase.
Tax increases and tax breaks are deeply affected by taxpayers’ behavior. Depending on how taxpayers react to a certain tax break or a tax increase affects revenue. As individual taxpayers receive the most benefits from tax breaks, it is their behavior that will most impact revenue.
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