Research Report Tax Subsidies for Asset Development: An Overview and Distributional Analysis
Benjamin H. Harris, C. Eugene Steuerle, Signe-Mary McKernan, Caleb Quakenbush, Caroline Ratcliffe
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The federal government channels much of its support for asset building through the tax code. Asset-building tax subsidies, primarily for homeownership and retirement saving, totaled $384 billion in 2013. This report reviews federal tax expenditures for housing, retirement, savings, business development, and higher education. We highlight research on the effectiveness of and justifications for these expenditures, find limited efficacy in their current form, and note possible adjustments. We estimate the distributional effect of major tax expenditures and find that the vast majority of subsidies benefit the top two income quintiles. Last, we review prospective policies such as matched saving accounts and automatic enrollment.
Research Areas Education Wealth and financial well-being Aging and retirement Taxes and budgets Housing
Tags Higher education Federal housing programs and policies Asset and debts Pensions Individual taxes Opportunity and ownership
Policy Centers Income and Benefits Policy Center Urban-Brookings Tax Policy Center