text: 5 tax breaks help rich get richer - 3 - Wealth & taxes – MSN MoneyMoreAutosCareers & JobsCelebritiesDelishEntertainmentGamesGloHealthy LivingLivingMoneyNewsmsnNOWReal Estate & RentalsSportsTravelVideoWeatherFull MSN IndexOutlook.comInboxCalendarContactsSend e-mailMobileBingRewards� MONEYBing SearchMoney | Web | Images | Video | News | MapsHOMEmarketsstock scouterportfolio managerbroker centercredit & debttop stocksNEWSheadlinesvideoVIDEOINVESTINGportfolio managermarketsstocksmutual fundsetfsbroker centertop stocksPERSONAL FINANCEsaving & budgetingcredit & debtloansretirementinsurancetaxessmart spendingREAL ESTATECAREERSAUTOSTaxes1/4/2012 2:27 PM ET|By Jay MacDonald, Bankrate.com5 tax breaks help rich get richer(Continued ...)According to the Tax Policy Center, the top 20% of income earners enjoy 80% of the tax write-offs for retirement saving, while the bottom 60% take advantage of a whopping 7% of the tax savings.Which is understandable, considering that the higher your income, the more likely you are to own a 401k plan with generous employer contributions. Nearly half of all Americans do not have access to employer retirement plans, and most who do can't afford to take full advantage of the tax incentive."It's, again, a question of targeting incentives," Hanlon says. "The tax benefits probably aren't as well-targeted as they should be. The wealthy probably would save regardless of the tax benefit."5. Charitable deduction: Good cause, policy flawsThe charitable-giving deduction effectively operates as a federal matching program: If you make a charitable donation, you get a tax break. In fiscal 2011, the charitable deduction saved Americans (and cost Uncle Sam) $53.7 billion, according to the U.S. budget.The problem with the charitable deduction is similar to that of the mortgage income tax break: The value of the deduction increases with income."If I give $1,000 to charity and I'm in a 10% tax bracket, I get $100 back on my taxes," says Wilkins. "But if I'm in a 35% tax bracket, I get $350 back from the federal government."Tax advantages for seniorsPlus, you have to itemize on IRS Form 1040 Schedule A to claim the charitable deduction."If we're trying to encourage charitable giving, we should be encouraging people with less money than people with more money to make those gifts," Wilkins says.Single page< Prev123RELATED ARTICLES12 tempting tax tips for 201212 smart savings tips for 2012Compare CDs and investment ratesTaxes: Income tax preparation, filing and deduction advice ...Tax video: Get expert tax advice and tips - MSN MoneyMSN Money Search - MSN MoneyVIDEO ON MSN MONEY
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