03/26/2012 11:27 am ET Updated Mar 26, 2012

Tax Breaks Add Up To $1.1 Trillion, As Much As Federal Budget Deficit

Take all the tax breaks in the U.S. tax code and put them together.

You'll find that they add up -- and up and up.

That's the conclusion of a recent report from the Congressional Research Service, an arm of the Library of Congress that provides research and analysis for federal lawmakers. In a report issued last week, the CRS found that all the major tax breaks currently in use in America add up to about $1.1 trillion a year.

As The Wall Street Journal points out, that's about the size of the current federal budget deficit -- a near-record, 13-digit sum that in recent months has inspired no end of political wrangling as lawmakers debate the best way to cut costs.

But even though the tax breaks are costing the government big time, it may still make sense to keep them in place. The CRS report argues that many of those tax breaks -- including the exclusion from taxable income for health insurance, pensions, Medicare and Social Security, as well as the kind of itemized deductions that let people write off their charitable contributions -- are "broadly used" and "quite popular," and fulfill important economic functions.

On the other hand, some of the tax breaks are the kind that really only affect wealthy households. The relatively low tax rate on capital gains -- that is, money earned on investments, as opposed to wages earned at a job -- translates to about $71.4 billion in tax breaks every year, the CRS says.

That's $71.4 billion in unpaid taxes from mostly affluent Americans -- including Republican presidential candidate Mitt Romney, who paid a tax rate of just 13.9 percent in 2010, mostly due to capital gains exemptions.

Debate has intensified in recent months over how much capital gains should be taxed and over tax breaks for the rich more generally. The billionaire financier Warren Buffett has called for revisions to the tax code that would tax the wealthy at rates that are closer to those of their middle class counter parts, an idea that President Obama has included in his budget proposal in some form.

Even with additional finagling to the tax code, the CRS says, the government could only realistically expect to get its hands on about $100 or $150 billion of that $1.1 trillion. The rest, it says, would be too difficult, politically or economically, to get to.