Evening Must-Read: Michael Strain: How to Cut Taxes and Help the Poor

Michael Strain: How to Cut Taxes and Help the Poor: “Many tax expenditures are obscure. But several are familiar to large swaths of Americans, including the mortgage-interest deduction….

Who benefits from this subsidy?… In 2013, the mortgage-interest deduction cost a whopping $70 billion, nearly three-quarters of which accrued to households with income in the highest 20 percent of the population, with 15 percent going to the top 1 percent…. More than half of the tax benefits from the 10 costliest tax expenditures were enjoyed by households in the top 20 percent. Seventeen percent of the benefits accrued to the top one percent. We should move the tax code away from spending money on high-income Americans… phase out the mortgage-interest deduction and the tax exclusion for employer-provided health care… keep the tax deduction for charitable contributions and the child tax credit…. What to do with the extra revenue?… Use much of it to lower tax rates as a way to encourage work and investment… use some of the money to encourage work…. Only four in 10 high-school dropouts have a job… the low wages less-educated Americans can command in today’s labor market… expand the Earned Income Tax Credit (EITC)…. We could completely fund a significant EITC expansion for childless workers with less than one-tenth of the revenue from eliminating the mortgage-interest deduction…

March 26, 2015

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