The Most Expensive Tax Breaks

The January 2013 fiscal cliff tax deal raised tax rates for the wealthy, but Washington continues to look at limiting tax breaks – either to raise more revenue or to reform the tax code and lower tax rates, or both. Here are the most expensive “tax expenditures” benefiting individuals, based on the Joint Tax Committee’s estimates of what they’ll cost Uncle Sam in 2013 through 2017. The list includes not only deductions and income exclusions, but also refundable credits and subsidies that are wholly or partly delivered through the tax code and IRS.

1. Employer Paid Health Insurance
Five year cost: $760 billion

If a company provides you with health insurance or health care, it can deduct the cost from its taxable income. But the value of the premiums or care is not counted as income to you, even though it may now, confusingly, show up on your W-2 (in box 12, Code DD). Beginning in 2018, the value of certain high-cost “Cadillac” health insurance plans will be subject to a premium tax, but even that tax won’t be levied directly on individuals.

[More from Forbes: 15 Ways To Invite An IRS Audit]

2. Lower Rate For Capital Gains, Dividends
Five year cost: $616 billion

Qualified corporate dividends and capital gains on stock and certain other investments held for more than a year are taxed at a top 20% rate, compared to a 39.6% rate for ordinary income such as salary and taxable bond and CD interest. Among the biggest tax expenditures, the benefit of this one skews the most to the rich.

3. State And Local Tax Deductions
Five year cost: $431 billion

Taxpayers who itemize can deduct state income or sales tax, plus taxes on personal property. The tally for that is $278 billion. Itemizers can also deduct real estate taxes on their homes – another $153 billion over the five years.

4. Mortgage interest deduction
Five year cost: $379 billion

Taxpayers can deduct interest paid on mortgages totaling up to $1.1 million used to buy or improve a primary home and a secondary or vacation home. A yacht with a berth, galley and head can count as a second home. The $379 billion doesn’t include other breaks for housing, such as the exclusion from income of up to $500,000 per couple in capital gains from the sale of a principal residence, which will cost $130 billion over the next five years.

5. Tax Free Medicare Benefits
Five year cost: $358 billion

All Medicare insurance benefits are excluded from taxation. To the extent that the value of that insurance exceeds the premiums senior pay and the amount they have contributed in Medicare taxes during their working years, the value of Medicare is considered untaxed income to them.

[More from Forbes: 10 Ways To Become A Victim Of Tax Identity Theft]

6. Workplace Retirement Saving Plans
Five year cost: $336 billion

This number includes the exclusion from taxable income of employer and employee contributions to 401(k)s and other employer sponsored retirement savings plans, as well as the exclusion of earnings in these accounts. It doesn't include the additional $64 billion cost for retirement plans for the self employed or the $212 billion cost for traditional, employer paid “defined benefit” pensions – the kind that pay a set amount each month.

7. Earned Income Credit
Five year cost: $326 billion

This credit is available to low income working families; the maximum credit in 2013 for families with three or more children is $6,044. The credit is refundable – meaning families can get back more from the credit than paid in taxes. Of the $326 billion, $283 billion will be made up of such refunds.

8. Child Credit
Five year cost: $292 billion

This $1,000 credit for each child under 17 begins to phase out once a couple’s modified adjusted gross income exceeds $110,000 or a single parent’s MAGI exceeds $75,000. The credit is partially refundable – meaning families can get back more from the credit than they paid in income tax. Of the $292 billion cost, $154 billion comes from such refunds.

Full List: The 15 Most Expensive Tax Breaks

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Not Having a BYOD Policy Can Get Expensive

Cybersecurity is, it’s fair to say, a major obsession in corporate and government circles. The evidence isn’t merely anecdotal: A whitepaper released earlier this month and analyzed by CorpCounsel.com says that cybersecurity is one of the top risk factors cited in filings to the Securities and Exchange Commission.

You’re concerned, too, if the results of our 2013 In-House Tech Survey are anything to go by. Specifically, a good chunk of respondents are worried about leaks from employees bringing their own devices (BYOD) to work—and carrying company secrets out with them.

Here’s some more reinforcement: A survey by e-discovery vendor FTI Technology shows that 64 percent of the in-house lawyers responding called Big Data their biggest e-discovery challenge, and are preoccupied with the implications of BYOD.

“Many of us are dealing with the BYOD issue right now,” notes one respondent. “There’s a lot of competition between IT, which wants to serve the employees, and the legal/compliance teams, who want [security on devices] done properly.”

What’s a tech-savvy corporate counsel to do? You can’t go back, says Erik Hammerquist, director of FTI. “So you have to have an acceptable use policy.” He says legal departments, working with IT and human resources, need to issue written rules for employees accessing company data on personal devices. These policies should be read and signed by the employees.

Some companies are going further, making sure that IT professionals segregate company material on a separate part of the employee’s phone, tablet, or laptop.

What happens if you don’t have formal BYOD policies? “It can get expensive,” says Hammerquist. Often, e-discovery means getting access to the employee’s device. If the employee refuses, “it can get complicated—and expensive.” He talks about one situation he experienced in which an entertainment industry employee balked at letting his company lawyers see texts on his phone. “Another law firm was brought into the matter—another expense.”

Having a BYOD policy—and employees who adhere to guidelines—can mitigate such risk and expenses. In the end, Hammerquist says, “if you can control what happens when people misbehave, you’re doing okay.”

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Report: 'World's Most Expensive Car Crash' results in 10 charged [w/video]

Justice is slowly being served to those drivers who were involved in a 10-car pile up in Japan last year that saw eight Ferrari models, one Lamborghini and three Mercedes-Benz vehicles hauled off for scrap. As you may recall, the lead driver lost control of his machine, pin balling into those following behind and doing some $4 million in damage in the process. Now the 61-year-old lead driver and nine others have had their cases sent to prosecutors.

The group are currently being charged with suspicion of violating traffic laws. We'll take a moment to wait for the laughter to die down before continuing.

Prosecutors claim the drivers were exceeding the speed limit and not paying attention to the road when the incident happened. Six people were injured in the dust up, but everyone survived. The group was on their way to a supercar event in Hiroshima. Feel free to watch the original news reports below.

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