Those are the three biggest tax breaks in the tax code, according to congressional estimates. Together, they are projected to save taxpayers nearly $450 billion this year.
In all, taxpayers will save about $1.1 trillion this year by taking advantage of tax breaks, according to the Joint Committee on Taxation, the official scorekeeper for Congress. That’s almost as much as individuals will pay in income taxes.
To avoid angering millions of constituents who rely on popular tax breaks, politicians prefer to endorse tax reform without getting into specifics. Instead, they say they want to reform the tax code by eliminating special interest “loopholes” that help only small but well-connected groups of taxpayers.
Obama has repeatedly said he wants to eliminate tax breaks for hedge fund managers and companies that buy corporate jets. Throughout the recent fiscal cliff debate, House Speaker John Boehner said he favored raising additional tax revenue by reducing unspecified tax loopholes rather than raising income tax rates.
Olson defines “loopholes” as tax breaks that benefit someone else. She warns that targeting only narrow provisions won’t raise enough revenue to significantly lower rates or make the law much simpler.
“That’s what we’ve been trying to say to taxpayers, that the special interests are us. It’s not just oil and gas or whatever you want to point your finger at,” Olson said. “That’s not where the money is.”
Online: National Taxpayer Advocate: http://www.taxpayeradvocate.irs.gov/2012AnnualReport
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