The overhaul of the US tax code was supposed to make taxes simpler and more streamlined.
Nearly doubling the standard deduction was a move in that direction.
But the changes did very little to reduce the number of so-called tax expenditures — a term for all credits, deductions, exemptions and exclusions.
“We just had a major tax reform and there are still over 200 tax expenditures,” said Len Burman, co-founder of the Tax Policy Center and an Institute Fellow at the Urban Institute.
That just shows how hard tax reform is, because for all the talk about closing “loopholes,” it fast becomes apparent to lawmakers that some of the costliest tax breaks are those that ordinary Americans think of as theirs, Burman said.
There’s also little change in the list of the biggest tax breaks for individuals, based on data from the Joint Committee on Taxation.
Their rankings, however, have changed somewhat.
All in, tax expenditures for individuals and businesses cost more than $1 trillion a year.
But these top 10 still account for the lion’s share of the tab between 2017 and 2021.
- Excluding from tax of employer contributions to employee’s health insurance costs ($854 billion)
- Reduced tax rates on dividends and long-term capital gains ($649 billion)
- Exclusion from tax on contributions and gains in 401(k)s and other defined contribution plans ($624 billion)
- Expanded child tax credit ($526 billion)
- Exclusion from tax on contributions and gains in defined benefit pensions ($470 billion)
- Earned Income Tax Credit ($363 billion)
- Charitable contributions deduction ($261 billion)
- Obamacare health insurance subsidies ($231 billion)
- Mortgage interest deduction ($217 billion)
- State and local tax deduction ($208 billion)
The newly created 20% deduction on qualified business income just missed making the top 10 when considered over the 5-year period.
But it moves into the top 10 starting next year, knocking the SALT deduction off the list, and pushing the mortgage interest deduction into last place.
CNNMoney (New York) First published June 11, 2018: 10:54 AM ET