Feds Cloak Redistribution

You’ve probably seen the signs. They are put on the corners of major intersections every tax season by tax preparation companies. This year they say something like this:

  • Get up to $3,359 with one child!
  • Get up to $5,548 with two children!
  • Get up to $6,242 with three children!

Or sometimes you will see the signs with an additional $1,000 per child:

  • Get up to $4,359 with one child!
  • Get up to $7,548 with two children!
  • Get up to $9,242 with three children!an incentive to lie about income in order to claim the credit. Taxpayers who engage in this behavior not only have to pay back the erroneous refunds, including interest and penalties but may face criminal prosecution.

    Americans who receive refundable tax credits get another added benefit as well. According to page 58 of the IRS’s 1040 instructions for 2015:

    Any refund you receive as a result of taking the EIC can’t be counted as income when determining if you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any  federal  program or under any state or local program  financed in whole or in part with federal funds. These programs include Temporary Assistance for Needy Families (TANF), Medicaid, Supplemental Security Income  (SSI), and Supplemental Nutrition Assistance Program (food stamps). In addition, when determining eligibility, the refund can’t be counted as a resource for at least 12 months after you receive it. Check with your local benefit coordinator to find out if your refund will affect your benefits.

    So, if refundable tax credits are a form of welfare and rife with fraud, why are they still in existence? Why do they have wide bipartisan support? And why does the maximum amount of the EITC increase every year?

    I can give you the answer in one word: Republicans.

    But I thought Republicans were opposed to welfare? I thought they were opposed to income transfer programs? I thought they were opposed to social engineering? I thought they were opposed to income redistribution schemes? Don’t Democrats criticize Republicans for their opposition to these things?

    Think again.

    Republicans are not opposed in principle to any of these things. In fact, the EITC program began under a Republican president (Gerald Ford), increased under Republican presidents (Ronald Reagan and George H.W. Bush), and increased again when Republicans had a majority in the House and Senate for six years when Bill Clinton was president. When Republicans controlled both Houses of Congress under George W. Bush for over four years they could have easily abolished the EITC and all other refundable tax credits. They, of course, failed to do so. They were too busy expanding the federal budget and doubling the national debt.

    Republicans are welfare statists just like Democrats.

    The post Feds Cloak Redistribution appeared first on LewRockwell.

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