Middle Class Tax Breaks: An Invisible Lifeline?
By Rev. Jim Conn
When a man makes millions a year and pays a paltry tax of 13 percent and then demonizes people too poor or too old to pay any, who's the "moocher?" Well, that's easy, but besides the really rich, those of us who are in the middle class also get lots of breaks. The federal tax code offers tax deductions that support our comfort, while the budget delivers subsidies that underwrite the way we live. Some of these are obvious, some obscure and some buried so deep we don't bother to count them.
Let's start at home. Homeowners receive the "home mortgage interest deduction," which costs the federal treasury $84 billion a year. That’s at least twice as much as the federal government spends on affordable housing for the poor and working poor. But that’s just the surface. As a working minister, although I received a relatively low salary, I also collected a housing allowance that covered my rent, plus utilities, including cable TV if I wanted it. None of it was declared as taxable income and now, in retirement, I still pay no taxes for these parts of our monthly budget. Special? Yes, but not unique. Everyone with a home office can take a percentage of both the house itself and the utilities as tax write-offs.
Other deductions include property depreciation for office equipment - computers, printers, phones, filing cabinets, etc. - as well as research material including books, professional magazines and journals, and any materials to keep abreast of one's field of work which could include theater, movie and concert tickets.
Of course, charitable contributions are also tax deductible, but often they fit right into work or a career. Attend a gala and network with colleagues, deciders and other business types - take it off your taxes. Spend big at the "silent auction" tables - take home the loot, deduct the costs from your taxable income.
Middle class families take deductions for their health insurance, which costs the federal government $184 billion annually. The standard deduction for each child is $3,800 a year plus the cost of child care. If your children watch Sesame Street on public television or you listen to public radio, the whole family gets the benefits of a federal budget item. But whenever we listen or watch anything on radio or TV, we receive a hidden subsidy that keeps us entertained.
There are still other subsidies we take for granted. The federal government spends $15 billion a year to prop up farm prices on corn and soy, for example, that make of corn flakes and sugary sodas cheaper. Cotton subsidies write down the cost of T-shirts, chinos and everything else you wear that say they come from a "natural" fiber. When we wash those clothes or turn on the tap, the water comes from dams built by the national government and delivered by channels dug and maintained by the state, regional and local units. Keeping that water clean is another big-ticket federal expense.
Of course, most of us don't even think of these subsidies as we live our lives, comfortably going on our way. We don’t see ourselves as "moochers" or benefiting from the tax laws. We middle class Americans just dislike paying taxes, and we think the government doesn't do a very good job using our money. While we take these policies for granted, the subsidy list goes on.
If you live in an area where fires can burn you out or earthquakes could shake you out, taxes subsidize the insurance, and taxes pay to put out the fires or rebuild after the devastation. In the interim, your living arrangements are paid for by your fellow taxpayers - even if the services are delivered by the Red Cross. Those of us living in such jeopardy, benefit from the billions the Army Corps of Engineers spent making us more secure. Nor should we discount all the energy that keeps these efforts moving - oil, electricity, coal, natural gas. These fuels either receive huge tax subsidies or tax waivers - like the oil depreciation allowances in California.
Boring details, for sure, but usually it's the tedious and obscure decisions that create the imbalance that threatens the fabric of society itself. The "moochers" are the ones who take more than their fair share of these benefits or have the power to twist the budget to get more than the rest of us, while calling the poorest and the weakest among us demeaning names.
Rev. Jim Conn is an ordained minister in the United Methodist Church and has served on the Santa Monica City Council and as that city's mayor. He is a proponent of community-based organizing, forging relationships between local stakeholders, non-profits, and religious organizations to resolve issues within the community. This article originally appeared at The Frying Pan.