Although many of the special-interest income tax laws are for the benefit of a small number of people, some are used by a substantial percentage of taxpayers. The following data is from tax year 2007 about the use of special-interest tax deductions.
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| Special-Interest Incentive | Taxpayers Who Used |
| some 1040 Schedule A deduction | 35.83% |
| some 1040 tax credit | 34.09% |
| Charitable Contributions deduction | 29.15% |
| Home Mortgage Interest deduction | 28.91% |
| State & Local Income Taxes deduction | 26.01% |
| some 1040 income adjustment | 25.56% |
| Child Tax credit | 18.35% |
| Earned Income credit | 17.43% |
| Self-employment adjustment | 12.65% |
| State & Local Sales Taxes deduction | 8.46% |
| Medical & Dental Expenses deduction | 7.46% |
| Student Loan Interest adjustment | 6.45% |
| Foreign Tax credit | 5.41% |
| Education credit | 5.27% |
| Child Care credit | 4.60% |
| Retirement Savings Contribution credit | 4.16% |
| Tuition and Fees adjustment | 3.22% |
| Residential Energy credit | 3.07% |
| Self-employed health insurance adjustment | 2.72% |
| Educator Expenses adjustment | 2.59% |
| Individual Retirement Account pre-tax contribution | 2.34% |
| Gambling Losses and miscellaneous deduction | 1.20% |
| Self-employed retirement contributions adjustment | 0.84% |
| Early savings withdrawal penalty adjustment | 0.83% |
| Moving Expenses adjustment | 0.79% |
In addition to explicit tax reductions due to income adjustments, deductions and credits, there are also lower tax rates for special-interest income, such as qualified dividend income and long-term capital gains, and an alternative minimum tax (AMT) that penalizes those who earn high incomes but not those who earn very high incomes.
While these special-interest tax incentives may have been set up for the best of intentions (e.g., to encourage charitable giving, to make it easier to afford to buy a home, and to increase investments to help grow economy), they often do so unfairly and at a higher cost for everyone else. The result is that taxpayers who do not qualify for a particular special-interest tax incentive are effectively paying additional taxes to subsidize the taxpayers who do take advantage of it.
Shouldn't everyone just pay the same income tax rate(s), and not pay more or less based on what they decide to do with their money?
U.S. GPO Bookstore for purchasing CFR: http://bookstore.gpo.gov/baskets/cfr-listing.jsp
IRS 2007 Individual Income Tax Returns: http://www.irs.gov/pub/irs-soi/09fallbulindincomeret.pdf
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