There are deductions for pension plans (with preferential treatment for Keogh plans, generally used by the affluent) to charitable donations (and we're not talking church collection here--Nancy Reagan got a $6,000 deduction for giving some designer clothing to a museum). Even owning thoroughbreds can save you money, since they qualify as livestock--making for racehorse names like My Deduction, Write Off, Tax Holiday, and Justa Shelter. Sometimes creative accounting gets a little ahead of itself: L.A. magnate William Wilkerson once claimed a deduction for maintaining his Bel Air home (including two maids, a cook, a chauffeur, a butler, and gardeners), arguing he had to have it so he could do "business at the dinner table." The U.S. Board of Tax Appeals eventually rejected that one.

With some kinds of income, you don't even need a deduction to reduce your taxes. State and local bonds--the kind governments issue for everything from stadiums to airline maintenance bases--offer a fantastic deal to people like Ross Perot, who, according to information he filed with the Federal Elections Commission, made upwards of $18 million in public bond interest in 1991, without having to pay a penny to the IRS.

The biggest investment-related break is probably the preferential treatment for capital gains--profits from the sale of stocks, real estate, and other assets that become more valuable as you hang on to them. Say a person--perhaps borrowing some money and using the interest deduction--buys some stock, or real estate, for $1 million; five years later it's worth $4 million. The profit is taxed at a top rate of 28 percent; by contrast, a couple whose annual taxable income is $95,000 pays 31 percent, simply because they got their money from paychecks rather than trading paper.

Again, in theory the deal is available to anyone; in practice, it benefits the affluent almost exclusively. According to Citizens for Tax Justice, people making more than $200,000 a year reaped 96.7 percent of all the capital-gains tax advantage in 1994; people making between $100,000 and $200,000 took care of most of what was left. And capital-gains taxes are due for another cut if politicians have their way. Under one proposal in the Contract with America, the rate would be cut to an effective 19.8 percent. The argument is that this would stimulate investment, though by most historical analyses that's never happened when the rate was cut before; instead, money simply flowed from investments that didn't get the break, like certain stocks, to those that did, like the office buildings that sprouted everywhere in the early 1980s. (This is true for many types of tax-based economic tinkering: As Michael Kinsley has pointed out, if you cut taxes in half for all the people named "Newt," you'd probably see a rise in income for Newts--not because everyone by that name suddenly got the urge to make money, but because rich people changed their name to Newt.)

The list goes on, but the pattern stays pretty much the same. There are a few tax breaks designed specifically for people with low to moderate incomes, notably the earned-income credit, which actually gives you money back even if you made so little you don't owe taxes. But it's slated for cuts that could eliminate one fifth of the 14 million families currently using it, and reduce the benefits to those who remain covered. Instead, politicians from Bill Clinton to Rod Grams are championing a $500-per-child tax credit that would not be available to the poorest working families because it only applies to taxes actually paid.

And none of this even takes into account the additional tax breaks for large corporations; the details could (and do) fill books, but one figure tells much of the story. In 1954, corporations paid 75 cents in taxes for every dollar paid by individuals and families. In 1994, the figure was about 20 cents to the dollar. By Barlett and Steele's calculation, if corporations paid taxes in 1994 at the same rate they did in the 1950s, the U.S. Treasury would collect an extra $250 billion a year--enough to nearly eliminate the federal deficit, pay for a universal health care system, or cut taxes by more than half for everyone making less than $200,000.

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