I worked for the IRS and survived. I learned about taxpayers, but the really interesting part of it was learning about tax-takers.
We all have this vague notion of people who don't pay taxes but receive money from Uncle Sam in what euphemistically is called a tax refund. That's what I had, a vague notion, until I was forced to close my business in 2010. I took a seasonal job with the Internal Revenue Service to get some household cash flow going. We "Timmy Geithner warriors" were appalled by what we learned.
We generally knew that 47 percent of our population pays no income taxes whatsoever. However, we didn't know, and I suspect that very few of you know, how much of your tax money is actually given to non-taxpayers -- in a lump sum, to do with as they please. Over lunch we joked that half the tattoo parlors in America would go under without Uncle Sam's largesse. Only later I learned that was closer to the truth than a joke.
Like most anti-poverty programs, the Earned Income Tax Credit when enacted in 1975 was supposed to be temporary. It was visualized as a tool to lift the working poor out of poverty. It was quickly made permanent and has been modified numerous times over the ensuing 36 years. In 2004, 20 million families received $36 billion. The flower children assume that was $36 billion spent on food, shelter, and health care. We who live in the real world know it was spent on big-screen television sets, 22-inch chrome wheels, and colorful tattoos.
It was widely noted last week that those living below the poverty level in the U.S. tend to own cars, TVs, computers, cells phones, enjoy air-conditioning, and own video game consoles. The free money these folks receive from you and me is not counted for poverty level calculations.
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DelMarVa's Premier Source for News, Opinion, Analysis, and Human Interest Contact Publisher Joe Albero at alberobutzo@wmconnect.com or 410-430-5349
I prepare taxes for a living, and the abuse of the EITC program is crazy. The credit works like a bell curve, so if you make no money, you get no credit, and if you make too much money, you get no credit. Let me tell you that almost every one of my EITC clients knows exactly where the sweet spot is.
ReplyDeleteFor example, if you are single and have three qualifying kids, you'll receive the maximum EITC payment of $5,666 if you make between $12,550 and $16,450 (2010 numbers).
I cannot count the number of clients I've seen over the years who have told me that they only work part of the year so that they don't make too much money to get the maximum credit.
They also pass around kids from one return to another in order to maximize not only their credit, but their sister's or brother's, too. Three kids is the max you can claim for this credit, so if you have four or five, you give their information to a family member who claims that the kids lived with them. Fortunately, the IRS is starting to get better at catching this fraud.
I hate this particular wealth transfer because I see it up close and personal every year: my hard-earned money is basically being taken directly from my paycheck and given to lazy people so they don't have to work.
Great, Joe, now my blood pressure is up right at bed time!
one day you should just camp out at the WIC building to take pictures of the cars, trucks, and SUVs that park there. U-N-R-E-A-L!
ReplyDeleteBecause there's no oversight!
ReplyDeleteI guess we have the "source" for the guy who piously asked for the "source" for the comment someone made about people who have kids or remain single just to get benefits. Why would a 24 yr old woman have 5 kids, knowing she doesn't have a job and not one of the fathers wants to get married? A CHECK!! Thats why. WORKING people LIMIT the number of kids they have because THEY actually have to support them. But, if each child you have represents $1800 or so in cash each January, and your doctor care is free, your rent is $10 a month, your day care is paid in full (and it get those little buggers out of the house all day), and you also get a free cell phone to "hook up" with your girlfriends at the club, AND you can go to school for free (borrowing the max amount in cash, of course, because you have NO intention of ever graduating OR paying the money back, well, you get to drive that new Toyota (that I can't afford) and get the moon and stars painted on your nails each Saturday, which will match your new shoes (clubbing ain't easy) and the new extentions in your brand new hairdo. And the electric bill? HA!!! Thats paid for you, too. Then, even though its STRICTLY against the law, get your new boyfriend (NOT any of the fathers, so far) to move in with you and now the money REALLY starts flowing. To hell with a 4Runner, its Benz time! I'm feeling that working for a living, 40-50 hrs a week, paying taxes and my own bills, well, it ain' all its cracked up to be. AND, just as bad, my refund (if there is one), is counted as INCOME the following year, but according to the article, the "earned income" (what a joke of a name) is NOT??? Wow...
ReplyDelete