Thursday, September 30, 2010

Creating wealth for the wealthy

This report appeared in the Philanthropy News Digest and suggest that the wealthy in the U. S. receive numerous hidden benefits, many obvious and some not so obvious to the uninformed.  Certainly, the source of the report is well-respected and the basis of the information grounded in solid research and investigation.  Not something we're likely to hear about on the Sunday morning talk shows this week.  Have you noticed, no one seems to talk about "the poor,"  those folks who live in and struggle with poverty. 

Study Finds Federal Asset-Building Programs Reward the Rich, Penalize the Poor
Posted on September 24, 2010

The federal government spent nearly $400 billion in fiscal year 2009 to help people save money and build wealth, but the vast majority of the money went to the nation's richest taxpayers, a new report from the Annie E. Casey Foundation and the Corporation for Enterprise Development finds.

According to the report, Upside Down: America's $400 Billion Federal Asset-Building Budget  (26 pages, PDF), the top 1 percent of families received an average of $95,000 in assistance last year, while families making $100,000 annually received $1,600, and the poorest received less than $5. The inequitable distribution is all but invisible, the report found, because the wealth-building strategies are tucked into the federal tax code — as deductions, credits, and preferential rates — rather than in the government's annual discretionary budget, where they would receive more scrutiny.

By embedding asset-building strategies into the tax code as deductions and exclusions, the federal government naturally favors those who bear the heaviest tax burden. Indeed, the wealthiest 1 percent of taxpayers received 45 percent of the federal asset budget while contributing just 27 percent of total tax revenue. Policies that depend on direct outlays in the annual budget, including the Assets for Independence program, which provides matched-savings accounts for low-income families, have proven successful in encouraging savings, homeownership, and business startups. Yet, because they are visible, such programs often become fodder for partisan political battles.

"If we are serious about cutting the deficit, Congress could start by trimming these upside-down subsidies and creating a more equitable approach," said CFED president Andrea Levere. "As Congress debates whether to extend the Bush-era tax cuts for the wealthy and the president's fiscal commission develops recommendations to balance the federal budget, they should remember that we could shave $1 trillion off the deficit in the next decade simply by capping some of these benefits."

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