Who Benefits from Tax Expenditures? Incidence Based on Wealth
40 Pages Posted: 14 Jun 2016 Last revised: 6 Jun 2017
Date Written: June 5, 2017
Who benefits from tax expenditures? Prior research has focused on the extent to which higher income households obtain larger tax breaks from tax expenditure provisions, without regard to household wealth. We investigate whether households with higher wealth obtain larger tax breaks from the mortgage interest deduction. Using detailed information on income and wealth from the Survey of Consumer Finances, we find that tax breaks from the mortgage interest deduction are increasing in wealth for the wealthiest 10% of households. Combined with the evidence that higher income households obtain higher tax breaks from the mortgage interest deduction, the findings provide evidence that the mortgage interest deduction contributes to inequality more than previously thought.
Keywords: Tax Expenditures, Inequality, Mortgage Interest Deduction
JEL Classification: H24, H22, D63, K34
Suggested Citation: Suggested Citation