Comments on: Abusing a tax loophole meant to aid the poor Sat, 23 Mar 2013 13:49:31 +0000 hourly 1 By: QuakerOrts Mon, 07 May 2012 19:56:27 +0000 I prefer a simpler solution.

The EITC (or EIC as it as also called) was meant to refund Social Security taxes. Why not just make the first 10k or so not taxable for Social Security and Medicare tax purposes?

You would have to add a Social Security and Medicare tax calculation section to the 1040, because people might be over withheld or under withheld if they change jobs during the year, but you would eliminate the fraud by eliminating the temptation.

Whenever the government creates a program to hand out free money, people will line up to lie and cheat to get the cash, every single time.

By: Kberg Sat, 05 May 2012 08:08:51 +0000 The earned income tax credit is unfair, because it subsidizes families with children at the expense of singles

By: GMavros Wed, 02 May 2012 12:57:30 +0000 Why are we all so darn stupid and helpless?
This complexity in our tax system has proven to be a disaster, and yet we stand by as if we were all mentally handicapped.

There should only be one flat income tax for everyone and a social security payment for individuals. THAT’S ALL.
No State, City & Town taxes, no sales tax, no tax incentives, no tax breaks, no business/mortgage deductions, no etc., etc., etc. BS taxes & tax breaks.


We had a very healthy Social Security fund until congress reclassified it as a tax and put into the general fund so that it could be, and has been, raided by our corrupt crony government & their partners from Wall Street.

If the Social Security Fund was left in its original form there would have been a huge surplus in it that we retired senior citizens could use today, WE PAID FOR IT.
But then again we Americans have the reputation of selling our mothers for the dollar.

By: henryedward Tue, 01 May 2012 13:58:03 +0000 David,

Having utilized the EIC for 20 years, I know for a fact you are correct. In that time I have manipulated the system 3 times – twice minimizing, and one enhancing income. At certain levels the credits are $2,000 for $500 in income. If you manage this in December it is easily legitimately gamed. In all my years, I have only run into a hand full of people that have done this ever – and none on a regular basis.

I am far outside the norm as far as understanding how the credit works – I have assisted thousands of other poor and disabled folks preparing their returns. To a person they were always upset that they would not get the credit they had the previous year utilizing a service.

There are other tax and/or obscure tax-based programs which have created the same disincentives for work with both the poor and disabled. Many of them larger and more insidious. If you want to hear more sometime, let’s talk.

The $6,000 is not surprising on any level – been there, done that, almost out. The disincentives and flat-out punishment for working trap people in ways those who have never been here can not understand. Not any will, commitment, work ethic, or laziness way – simply a structural impediment.

In order to return to work there is usually a ~$20K hole to overcome. That means, best case, from working a minimum wage job a person has to jump to a minimum ~$32K position. I don’t know how many people get an ~$12/hr raise in a year, but not many. Critically, at the new income level you are still in poverty.

By: isdjww Mon, 30 Apr 2012 03:39:01 +0000 The more fundamental question is; Why is welfare imbedded within the tax code?

According to the US Dept. of Labor, the minimum wage is $7.25 per hour. For someone to earn $6000 per year, they would be working only 828 hours, or roughly 16 hours per week. A full-time job at minimum wage would bring in about $15,000. Still not very much money…

By: curleybrothers Fri, 27 Apr 2012 20:37:07 +0000 David

You forgot about the self employment taxes associated with self employment income. It does not completely offset the added EIC but it takes away at least half. I think you are a bit naive by assuming this is just a tax preparer issue. Most of the people getting the EIC are well aware of how much they need to earn. And you forgot to mention that family would also get the refundable child tax credits. So that family that earns about $12-$20k will get a refund of about $7500 or so. If you want to hand out welfare, don’t do it through the tax code.

By: OldHand Fri, 27 Apr 2012 14:20:50 +0000 As well, the IRS examines a substantial percentage of those claiming the earned income tax credit and disallows the credit to those with false or exaggerated Schedules C, “borrowed” children or the like, and then makes an assessment again the low income individual. That individual, not the unscrupulous preparer, then owes the money to the IRS. Sometimes, the IRS files a federal tax lien against the individual, and that individual’s credit rating is ruined for years. Also, some unscrupulous preparers arrange for the refund to be wired to the preparer’s bank account, provides the individual taxpayer with a cash refund, and has the individual sign a receipt for a refund corresponding to that claimed, but provides a smaller cash refund. In all, often this well-intentioned program turns out to be most damaging to many low-income taxpayers, and richly rewarding to the fleecing preparer.

By: TheOldSodbuster Fri, 27 Apr 2012 00:17:01 +0000 Dodging taxes is a game, just as cheating on tests is a game. A system in which it is stupid not to lie, or a system where lying is an ease of desperation are all corrupting. But is it any wonder when CEO’s get bonuses for cutting jobs. As above, So below , as Hermes said long ago. When bankers and hedge fund managers can purchase laws so that whatever they choose to do is not illegal…. is there any wonder that kids cheat on tests and some folks cheat on taxes. Our system is not only corrupt. It is corrupting.

Sorry for being so downbeat, but I just bounced here from cheatingculture dot com where one article mentioned three trillion lost to tax cheats, and you can bet that the big money did not go to those who bilk or mislead the poor. I believe DCJ commented on this 3 trillion in January.

By: matthewslyman Thu, 26 Apr 2012 22:36:39 +0000 Agree with all of the above… Doesn’t the IRS do statistical analysis on tax returns, grouped by the identity of the preparer? That could give them some interesting pointers too!