In all the discussion about federal spending, we have overlooked the tax
side which remains opaque and unaccountable. As the National Commission on Fiscal and Responsibility gets closer to releasing its report, we must look at how the nation subsidizes individual's wealth building through revenue foregone.
A new report by the Corporation for Enterprise Development should help them. "Upside Down: The $400 billion Federal Asset Budget" notes that in 2009, $384 billion was spent to help Americans save, invest and build wealth through tax benefits for homeownership, college, small business and investments.
The data shows that we can have much better return on our investment.
More than half the benefits went to the wealthiest 5 percent of taxpayers.
Americans earning more than $1 million annually receive more than $95,000 in tax benefits.
Middle-income families earning $50,000 receive less than $500 in benefits from tax breaks for mortgages, property taxes and investment income.
Low-income families, earning less than $20,000 a year, receive less than $5 and actually face penalties for saving due to outdated asset limits in public benefits programs.
As we consider how best to address our rising deficit, we realize that the best return on investment for families and communities is to enact policies that expand proven strategies that enable families to connect to the financial mainstream and build a nest egg to achieve greater financial self-reliance. These policies include an expansion of Individual Development Accounts, the Saver's Credit, reforming asset limits and enacting Automatic IRA for the half of the workforce not currently covered by retirement plans at their job.
As a nation, we can do better to enable than helping the haves to have more.