A Closer Look At Cutting Middle Class Tax Breaks

6:43 AM, Jan 14, 2013   |    comments
  • Share
  • Print
  • - A A A +

WASHINGTON (WUSA) --  We're sick of the back and forth on Capitol Hill after the fiscal cliff fight, but at the end of the day that $618 billion patch they agreed on really just delays dealing with bigger problems.

Now we have the debt ceiling debate starting up and Congress has to deal with automatic spending cuts set to kick in by early March.

Both of those debates are shaping up to look a lot like the debates we saw over the last two months. Standing front and center is the question of how to raise taxes.

The White House wants to tie any future spending cuts to bringing in more tax revenue. The rich are already getting hit with a new round of tax hikes and tax experts are saying it will be hard to raise new taxes without touching middle class families.

The Tax Policy Center says tax exclusions and deductions currently total $1.1 trillion a year, but less than 10 percent of those tax breaks actually benefit corporations, meaning most cuts would have to hit individuals.

So let's take a look at middle class tax breaks that are vulnerable: 

  • The biggest one is for employer health insurance. This break spares 60% of Americans from paying taxes on the health insurance they get at work. 
  • Another juicy break is the one that allows companies to offer tax-deferred pensions and 401Ks.  
  • A third is possibly eliminating the ability to deduct your mortgage interest. 

There's another option too: taking away more tax breaks on the rich, which could bring in several hundred billion dollars over a decade.

Most Watched Videos