Upside Down – $500 billion in Tax Incentives to Build Wealth in 2013
Now that 2014 is here, we can step back and take a good look at how the tax code helped American families build wealth in 2013. Check out Prosperity Now's new Federal Policy Brief, which reviews the half-trillion dollars in tax incentives for savings and investments last year.
Yes, half a trillion dollars. Also known as $500 billion. In one single year. This is what flows through the tax code in the form of exclusions, deductions and credits to help households save for emergencies, build nest eggs for retirement, and invest in homeownership, higher education and entrepreneurship.
If you're getting a head start on your 2013 tax return, you're probably wondering: how can I get my slice of that pie? Well, it's easy!
The best thing you can do is become one of the richest 1% of American families, such as a four-person household making more than $654,000 a year. This is an important step. These folks get more than a third of the $411 billion spent on the four biggest wealth-building incentives in the tax code.
Can't retroactively join the 1%? No problem! Just be sure to make it at least into the top 20%—an income of more than $162,800 will get a four-person household there. They rake in nearly 80% of these tax incentives to build wealth.
Whatever you do, don't fall into the bottom 40% (I'm looking at families of four making less than $77,000). If you do, on average you'll get less than 1/50 of your top-twenty counterparts' benefits from these tax incentives. One fiftieth.
Now you might be asking yourself: why does the tax code mostly just help the already-wealthy build more wealth? And shouldn't we be helping all families build personal nest eggs and save for college, homeownership and entrepreneurship?
Those are great questions to ask your members of Congress this election year. Go ahead and send them the Federal Policy Brief while you're at it.