WASHINGTON (Reuters) - The top ten tax deductions, credits and exclusions will keep $12 trillion out of federal government coffers over the next decade, and several of them mainly benefit the wealthiest Americans, a new study from the Congressional Budget Office shows.
The top 20 percent of income earners will reap more than half of the $900 billion in benefits from these tax breaks that will accrue in 2013, the non-partisan CBO said on Wednesday.
Further, 17 percent of the total benefits would go to the top 1 percent of income earners -- families earning roughly $450,000 or more. The same group that was hit with a tax rate hike in January.
The benefits of preferential tax rates on capital gains and dividends, a break worth $161 billion this year, go almost entirely to the wealthy, including 68 percent to the top one percent of earners.
House Democrats, who requested that Congress' budget referee conduct the study, argued that it backs up President Barack Obama's proposed approach to tax reform and deficit reduction: raise revenues by limiting the amount tax preferences for the wealthy.
"This shows that we could achieve a significant amount of deficit reduction by limiting the preferences to the highest income earners," said Representative Chris Van Hollen, the top Democrat on the House Budget Committee.
Although the study did not provide income thresholds, U.S. Census Bureau data for 2011 shows the top 20 percent of household income extends to down to $101,582, a level that is considered middle-class in many parts of the United States. The lowest quintile topped out at $20,262 in the Census data.