This document summarizes 10 government programs that provide benefits to wealthy individuals and corporations, including tax deductions for yacht interest payments, mortgage interest on high-value homes, rental property expenses, 50% of business meal costs, lower capital gains tax rates, elimination of estate tax for most people, ability to deduct gambling losses up to winnings, Social Security taxes only on first $118,500 of income, retirement savings incentives that mainly benefit high earners, and deductibility of tax preparation fees.

1. washingtonpost.com
The rich get government handouts
just like the poor. Here are 10 of
them.
Writing credits:
Emily Badger
Christopher Ingraham
WAPO 2014/15

2. The yacht tax deduction.
If you’ve got a boat and you’re paying
interest on it, that interest is tax-
deductible – provided your boat is
really, really big. If it has sleeping
quarters, a kitchen and a toilet – e.g.,
it is a yacht – then it can be
considered a second home and any
interest you pay on it is deductible.

3. The mortgage interest
deduction for big
houses and second
homes.
Thanks to this tax
break, the 5 million
households in
America making
more than $200,000
a year get a lot more
housing aid than the
20 million
households living on
less than $20,000.
This tax break
applies as well to
second homes

4. Rental property.
If you're a landlord, which
you probably aren't if you're
very low-income, you can
deduct many of the expenses
you incur renting a home,
including repairs, advertising,
HOA fees and — again —
mortgage interest. If you
happen to rent out either
your first or second home for
14 days or less — because,
for example, Augusta
National Golf Club is hosting
the Masters nearby — you
get to just pocket all that
income without paying taxes
on it at all.

5. Fancy business meals.
Imagine that the tab for dinner and drinks
for 10 executives comes to $1,600. Current
tax law allows companies to deduct half of
the cost of business meals — in this case,
$800. With a corporate tax rate of 35
percent, each dollar of deductions yields 35
cents of tax savings — so that $800
deduction saves $280 in taxes. This means
one dinner for 10 people provides more
public food assistance than the $279 an
average household receives in food stamps
for the whole month.

6. The capital
gains tax rate.
The top income tax rate is 39.6
percent. So investment income is
taxed at a much lower rate than
regular income. The annual
earnings of many of the ultra-rich
come from investments, not from
wages. This is why Warren Buffett
famously has a lower effective tax
rate than his secretary.

7. The estate tax
Without the estate tax, super-wealthy families would be able to
hoard that wealth in perpetuity, becoming ever more powerful in the
process. The tax, as it currently exists, only kicks in on estates worth
$5.4 million or more, affecting about the top 0.2 percent of
households. For everyone else in the top 1 percent, congratulations!
You can pass on your riches to your heirs tax-free.

8. Gambling loss deductions
You can deduct your
gambling losses up to
the value of any
winnings you earned.
More gambling
winnings mean more
gambling deductions,
incentivizing you to
keep gambling more to
at least break even.
And if you’ve got more
money to gamble,
you’ll have more losses
to deduct.

9. The Social Security earnings limit
Social Security taxes only apply to income up to
$118,500 – anything after that is Social Security tax-
free. So the more money you make, the less your
effective Social Security tax rate is, making this tax
about as regressive as they come. Technically, of
course, Social Security is a savings plan, not a tax.
But the rich tend to live longer than the poor and
receive benefits longer than lower-wage earners, so
an adjustment to the earnings limit would help
offset this difference. Social Security’s own
actuaries estimate that eliminating this cap would
reduce the program’s long-term deficit by about 86
percent.

10. Retirement plans
The federal government
incentivizes retirement by
allowing you to reduce your
taxable income by saving
money in 401(k) plans or IRAs.
But employer-sponsored
retirement plans only benefit
those people with employers that
offer them (so, largely not people
who work in retail or the fast-
food sector). And the benefit for
IRAs doesn’t help people who
have no money left over for
retirement after they pay their
living expenses. In total, about 66
percent of these retirement
subsidies go to the top 20
percent of taxpayers. Less than 1
percent go to the bottom 20
percent.

11. Tax prep
If you have hired an
accountant to help you sort
through all of these tax
breaks to make sure you
maximize them — which
the wealthy are much more
likely to do — you
get to write off that
expense, too.

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