Earned Income Tax Credit/Making Work Pay

[jwoodie]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

 

[Boatswain2PA]

I had a patient the other day. Single mother, worked minimum wage job. I can't remember what she was in the ER for, but it was a minor thing (free healthcare = overuse of ED). I fixed whatever thing she had wrong, and then started talking to her about smoking. She smokes over 1 pack per day. Here that's about $5 per pack, or $1825 a year. I try to use that as an another reason for her to stop smoking...she doesn't really "get" it.

She works minimum wage. $7.25 X 50 hour work week X 52 weeks a year = $18,850. I tell her she spends almost 10% of her income in cigarettes....she still doesn't "get" it.

So I try to relate the cost of smoking to how much she got back in tax returns. Stupid me, I figured she probably got a couple of thousand bucks back on taxes, so I would try to relate her stopping smoking to getting a "double" tax return every year...so I ask her how much she got for a tax return.......

I was forcefully, and visibly, stunned when she said she got back almost TWELVE THOUSAND DOLLARS!

Single mom. I don't know how many kids. Minimum wage job. Working 50 hours a week that nets $18,850 a year in wages, but she gets an additional TWELVE THOUSAND DOLLARS every year from Uncle Sam.

This was on the same day that I did my taxes and sent a HUGE check to the IRS. Now I realize why I pay soooooo damn much in taxes.

 

[asterism]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

I knew back when the 1986 expansion was proposed that it would end up being called welfare for big business. My high school civics teacher was a big 60s era hippie progressive and he said that it was never the goal of progressives to push for a cradle to grave welfare state. Of course he said that the gay community only wanted non-discrimination and civil unions, not marriage.

He was either lying to me or just so terribly wrong about his chosen affiliation.

 

[CaféAuLait]

I had a patient the other day. Single mother, worked minimum wage job. I can't remember what she was in the ER for, but it was a minor thing (free healthcare = overuse of ED). I fixed whatever thing she had wrong, and then started talking to her about smoking. She smokes over 1 pack per day. Here that's about $5 per pack, or $1825 a year. I try to use that as an another reason for her to stop smoking...she doesn't really "get" it.

She works minimum wage. $7.25 X 50 hour work week X 52 weeks a year = $18,850. I tell her she spends almost 10% of her income in cigarettes....she still doesn't "get" it.

So I try to relate the cost of smoking to how much she got back in tax returns. Stupid me, I figured she probably got a couple of thousand bucks back on taxes, so I would try to relate her stopping smoking to getting a "double" tax return every year...so I ask her how much she got for a tax return.......

I was forcefully, and visibly, stunned when she said she got back almost TWELVE THOUSAND DOLLARS!

Single mom. I don't know how many kids. Minimum wage job. Working 50 hours a week that nets $18,850 a year in wages, but she gets an additional TWELVE THOUSAND DOLLARS every year from Uncle Sam.

This was on the same day that I did my taxes and sent a HUGE check to the IRS. Now I realize why I pay soooooo damn much in taxes.

Indeed!

What is EITC, Earned Income Tax Credit?


EITC, Earned Income Tax Credit, is a benefit for working people who have low to moderate income. A tax credit means more money in your pocket. It reduces the amount of tax you owe and may also give you a refund.

EITC is also called EIC or Earned Income Credit.

EITC, Earned Income Tax Credit, Questions and Answers

And of course the 'Child Tax Credit" at 1,000 per child.

http://www.irs.gov/pub/irs-pdf/p596.pdf

Ten Facts about the Child Tax Credit

https://www.1040.com/federal-taxes/credits/additional-child-tax-credit/

So someone with 3 children making 16.2K ( 7.50 an hour/ 40 hrs a week) will get 6,044k plus another 3k for Child tax credit and another 1,500 for 'additional child credit' AND whatever you paid in federal taxes you are refunded. Lets say 1,500 hundred was paid in tax.

Their refund is 12,400.

Which take them from making 7.50 and hour to 12.50 an hour.

Not to mention any other benefits like food stamps, Medicaid, etc. which she may be eligible for.

The issue, it should not be incumbent upon taxpayers to up an individuals income but the employer.

 

[Mad_Cabbie]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

So, instead of businesses paying a living wage, you, me and everyone else should cough up extra cash in the form of higher taxes so people can afford to eat?

Why should we pay someone who doesn't work for us? Why not the employer who can and should???

 

[zeke]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

So, instead of businesses paying a living wage, you, me and everyone else should cough up extra cash in the form of higher taxes so people can afford to eat?

Why should we pay someone who doesn't work for us? Why not the employer who can and should???

Why you want to ask hard questions like the above? Just bash the poor and move on. You know it was poor people that wrote the tax code that gives them all that money. Them is some powerful poor people we have.

 

[editec]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

So you'd rather that your government pays these workers than the businesses that live off their labor?

What are you? Some kind of communist?

 

[Boatswain2PA]

Why you want to ask hard questions like the above? Just bash the poor and move on. You know it was poor people that wrote the tax code that gives them all that money. Them is some powerful poor people we have.

Zeke - Nobody is "bashing" the poor, just bashing the system. We are all allowed to do that.

You bring up a good point about who "writes" the tax code. Exactly who is this? Politicians - who are elected by PEOPLE...who are often poor.

Poor people vote for politician who will give them free stuff. The more free stuff, to the most people = most votes for these types of politicians.

The question is....who pays for the free stuff?? Can those of us who are not poor complain about paying for the free stuff without being told we are "bashing" poor people??

Can we complain about how MUCH free stuff we give??

 

[oldfart]

I hate to interrupt such a lovely discussion with something as mundane as facts, but here goes.

The Earned Income Tax Credit is a creature of conservative thought at its best. Originally it was proposed by Barry Goldwater's economic advisor Milton Friedman. He justified it on two grounds: that it was much cheaper to administer than traditional welfare and that it was less destructive of personal liberties. Experience has proven him dramatically correct on both counts. So it originated in a fiscally conservative and libertarian framework.

There is a cap to the EITC of $6,044. There is also a refundable child tax credit. But the interaction of the two eliminates the possibility of anyone receiving more than six thousand of refundable credit from the two combined. The portion of the CTC that is refundable is a percentage of earned income, and that percentage is lower than the phase-out rate of the EITC, so that in the relevant range as income increases, the refundable credit decreases, albeit at a much slower rate than looking at the EITC by itself. So anyone getting a refund over six thousand must be getting it from withholding or something other than CTC/EITC.

Now back to the previously scheduled discussion.

 

[oldfart]

I had a patient the other day. Single mother, worked minimum wage job. I can't remember what she was in the ER for, but it was a minor thing (free healthcare = overuse of ED). I fixed whatever thing she had wrong, and then started talking to her about smoking. She smokes over 1 pack per day. Here that's about $5 per pack, or $1825 a year. I try to use that as an another reason for her to stop smoking...she doesn't really "get" it.

She works minimum wage. $7.25 X 50 hour work week X 52 weeks a year = $18,850. I tell her she spends almost 10% of her income in cigarettes....she still doesn't "get" it.

So I try to relate the cost of smoking to how much she got back in tax returns. Stupid me, I figured she probably got a couple of thousand bucks back on taxes, so I would try to relate her stopping smoking to getting a "double" tax return every year...so I ask her how much she got for a tax return.......

I was forcefully, and visibly, stunned when she said she got back almost TWELVE THOUSAND DOLLARS!

Single mom. I don't know how many kids. Minimum wage job. Working 50 hours a week that nets $18,850 a year in wages, but she gets an additional TWELVE THOUSAND DOLLARS every year from Uncle Sam.

This was on the same day that I did my taxes and sent a HUGE check to the IRS. Now I realize why I pay soooooo damn much in taxes.

I posted my explanation separately. You have swallowed a fish story, hook, line, and sinker. There is no legal way to get a six thousand dollar refund based on CTC/EITC, much less double that. I hear lots of these from people who insist the guys down the street can get them a bigger refund. I tell them to go for it, with the guy down the street.

 

[Machaut]

I had a patient the other day. Single mother, worked minimum wage job. I can't remember what she was in the ER for, but it was a minor thing (free healthcare = overuse of ED). I fixed whatever thing she had wrong, and then started talking to her about smoking. She smokes over 1 pack per day. Here that's about $5 per pack, or $1825 a year. I try to use that as an another reason for her to stop smoking...she doesn't really "get" it.

She works minimum wage. $7.25 X 50 hour work week X 52 weeks a year = $18,850. I tell her she spends almost 10% of her income in cigarettes....she still doesn't "get" it.

So I try to relate the cost of smoking to how much she got back in tax returns. Stupid me, I figured she probably got a couple of thousand bucks back on taxes, so I would try to relate her stopping smoking to getting a "double" tax return every year...so I ask her how much she got for a tax return.......

I was forcefully, and visibly, stunned when she said she got back almost TWELVE THOUSAND DOLLARS!

Single mom. I don't know how many kids. Minimum wage job. Working 50 hours a week that nets $18,850 a year in wages, but she gets an additional TWELVE THOUSAND DOLLARS every year from Uncle Sam.

This was on the same day that I did my taxes and sent a HUGE check to the IRS. Now I realize why I pay soooooo damn much in taxes.

I posted my explanation separately. You have swallowed a fish story, hook, line, and sinker. There is no legal way to get a six thousand dollar refund based on CTC/EITC, much less double that. I hear lots of these from people who insist the guys down the street can get them a bigger refund. I tell them to go for it, with the guy down the street.

Seconding this. She either lied, confused "twelve thousand" with "twelve hundred," or just got an unusually large amount back on her previous return due to some special circumstance and doesn't actually get that same amount every single year.

 

[FA_Q2]

I had a patient the other day. Single mother, worked minimum wage job. I can't remember what she was in the ER for, but it was a minor thing (free healthcare = overuse of ED). I fixed whatever thing she had wrong, and then started talking to her about smoking. She smokes over 1 pack per day. Here that's about $5 per pack, or $1825 a year. I try to use that as an another reason for her to stop smoking...she doesn't really "get" it.

She works minimum wage. $7.25 X 50 hour work week X 52 weeks a year = $18,850. I tell her she spends almost 10% of her income in cigarettes....she still doesn't "get" it.

So I try to relate the cost of smoking to how much she got back in tax returns. Stupid me, I figured she probably got a couple of thousand bucks back on taxes, so I would try to relate her stopping smoking to getting a "double" tax return every year...so I ask her how much she got for a tax return.......

I was forcefully, and visibly, stunned when she said she got back almost TWELVE THOUSAND DOLLARS!

Single mom. I don't know how many kids. Minimum wage job. Working 50 hours a week that nets $18,850 a year in wages, but she gets an additional TWELVE THOUSAND DOLLARS every year from Uncle Sam.

This was on the same day that I did my taxes and sent a HUGE check to the IRS. Now I realize why I pay soooooo damn much in taxes.

I posted my explanation separately. You have swallowed a fish story, hook, line, and sinker. There is no legal way to get a six thousand dollar refund based on CTC/EITC, much less double that. I hear lots of these from people who insist the guys down the street can get them a bigger refund. I tell them to go for it, with the guy down the street.

Something in your calculation is off. I would guess it has to do with the number of children as I have seen others and have pulled myself over 6K before on my tax return. It certainly was not from what I paid in as well.

 

[Boatswain2PA]

I have absolutely no way of knowing whether she was telling me the truth or blowing smoke up my a$$....however with the pace and tone of our discussion I tend to believe her.

Perhaps she has a bunch of kids (I know she had some), and had her employer withhold for "zero" dependents, so they withheld a bunch.

Either way, I was shocked. Even with a max of $6K/year in EIC/CTC, and her making $16K a year, she gets more than a 30% "bonus" annually thanks to those of us who actually pay taxes.

We need to fix tax loopholes AND flatten the tax schedules. Fixing the tax loopholes would get the "rich" to actually pay more (instead of just hiding their income), while flattening the tax schedules would ensure everyone has a stake in the game.

 

[Politico]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

So, instead of businesses paying a living wage, you, me and everyone else should cough up extra cash in the form of higher taxes so people can afford to eat?

Why should we pay someone who doesn't work for us? Why not the employer who can and should???

It doesn't increase anything unless you are churning out babies. For the responsible folks it does nothing. And the program should be ended.

 

[jwoodie]

Nice attempts at trying to hijack this thread. Honest Knee Jerks (oxymoron) would be willing to REPLACE EITC/MWP with a minimum wage increase (or vice versa). Instead, they want to keep and expand ALL welfare programs in their attempt to enforce income equality regardless of ability or effort.

"From each according to his ability; to each according to his need."

 

[BillyZane]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

Correct, which proves the point that the US taxpayers are subbing lower wages. Let her employer pay her that extra $12K and let the taxpayer give her NOTHING.

 

[oldfart]

Nice attempts at trying to hijack this thread. Honest Knee Jerks (oxymoron) would be willing to REPLACE EITC/MWP with a minimum wage increase (or vice versa). Instead, they want to keep and expand ALL welfare programs in their attempt to enforce income equality regardless of ability or effort.

"From each according to his ability; to each according to his need."

Nice try; but still no cigar. I've been on record for almost forty years supporting an end to minimum wage and replacement with public employment, starting when I was teaching labor economics. While a lot of knee-jerk students dismiss it out of hand like you do, I have yet to run into a labor economist who doesn't have to think about it quite a bit more and most end up agreeing a case can be made.

I notice that you don't address any of the arguments for such a proposal. I assume you simply don't understand enough to make any response. Your only rejoinder is that welfare programs are persistent and never go away. This is not only factually incorrect on a massive scale, it is a logical fallacy. Economists have some expertise to express opinions as to the probable economic consequences of public policy; they have no necessary expertise or responsibility for what political processes do or not do in formulating public policy. The fact that the United States has the highest levels of teenage pregnancies in the developed world is not the fault of the public health system, but of the political processes that determine public health policy. Similarly it's my job to predict the outcome of economic policy alternatives, but I'm not responsible for the mess political hacks create when they decide to divvy up the pork.

If anyone is to blame for what you are complaining about, it is the conservative economic tradition from Milton Friedman onward. EITC has always been a libertarian/fiscal conservative baby as I mentioned before and which you apparently accept. This is your own mess, which you refuse to deal with and blame on other people. But then again, the definition of a conservative is someone who blames every bad outcome of their policies on someone else rather than modify their positions in light of evidence. If it was good enough for the Statutes of Edward III, there is no reason to change it now, right?

 

[Andylusion]

Nice attempts at trying to hijack this thread. Honest Knee Jerks (oxymoron) would be willing to REPLACE EITC/MWP with a minimum wage increase (or vice versa). Instead, they want to keep and expand ALL welfare programs in their attempt to enforce income equality regardless of ability or effort.

"From each according to his ability; to each according to his need."

Nice try; but still no cigar. I've been on record for almost forty years supporting an end to minimum wage and replacement with public employment, starting when I was teaching labor economics. While a lot of knee-jerk students dismiss it out of hand like you do, I have yet to run into a labor economist who doesn't have to think about it quite a bit more and most end up agreeing a case can be made.

I notice that you don't address any of the arguments for such a proposal. I assume you simply don't understand enough to make any response. Your only rejoinder is that welfare programs are persistent and never go away. This is not only factually incorrect on a massive scale, it is a logical fallacy. Economists have some expertise to express opinions as to the probable economic consequences of public policy; they have no necessary expertise or responsibility for what political processes do or not do in formulating public policy. The fact that the United States has the highest levels of teenage pregnancies in the developed world is not the fault of the public health system, but of the political processes that determine public health policy. Similarly it's my job to predict the outcome of economic policy alternatives, but I'm not responsible for the mess political hacks create when they decide to divvy up the pork.

If anyone is to blame for what you are complaining about, it is the conservative economic tradition from Milton Friedman onward. EITC has always been a libertarian/fiscal conservative baby as I mentioned before and which you apparently accept. This is your own mess, which you refuse to deal with and blame on other people. But then again, the definition of a conservative is someone who blames every bad outcome of their policies on someone else rather than modify their positions in light of evidence. If it was good enough for the Statutes of Edward III, there is no reason to change it now, right?

Replacing welfare with public employment?

So you have more public employees, the tax rate would have to dramatically increase to pay for all of them, requiring even more money from working people like me, which would be driven more and more into impoverishment, until we quit, and join public employment, which would drive higher taxes, driving more into impoverishment, driving more into public employment, driving higher taxes, driving more into impoverishment.

Soviet Union anyone? There's a reason they don't exist anymore. There's a reason Pre-78 China had 63% of the population living below the Chinese poverty line of $2 a day.

No, that's a horrible plan.

 

[Grandma]

Does anyone realize that these programs already increase the minimum wage? The current debate is nothing more that an election year political ploy to paint Republicans as big meanies, even if it further harms the economy. Carry on...

So, instead of businesses paying a living wage, you, me and everyone else should cough up extra cash in the form of higher taxes so people can afford to eat?

Why should we pay someone who doesn't work for us? Why not the employer who can and should???

It doesn't increase anything unless you are churning out babies. For the responsible folks it does nothing. And the program should be ended.

It doesn't matter if she has a baby every year - the IRS allows a maximum of three (3) children for the EIC.

 

[Grandma]

Nice attempts at trying to hijack this thread. Honest Knee Jerks (oxymoron) would be willing to REPLACE EITC/MWP with a minimum wage increase (or vice versa). Instead, they want to keep and expand ALL welfare programs in their attempt to enforce income equality regardless of ability or effort.

"From each according to his ability; to each according to his need."

Nice try; but still no cigar. I've been on record for almost forty years supporting an end to minimum wage and replacement with public employment, starting when I was teaching labor economics. While a lot of knee-jerk students dismiss it out of hand like you do, I have yet to run into a labor economist who doesn't have to think about it quite a bit more and most end up agreeing a case can be made.

I notice that you don't address any of the arguments for such a proposal. I assume you simply don't understand enough to make any response. Your only rejoinder is that welfare programs are persistent and never go away. This is not only factually incorrect on a massive scale, it is a logical fallacy. Economists have some expertise to express opinions as to the probable economic consequences of public policy; they have no necessary expertise or responsibility for what political processes do or not do in formulating public policy. The fact that the United States has the highest levels of teenage pregnancies in the developed world is not the fault of the public health system, but of the political processes that determine public health policy. Similarly it's my job to predict the outcome of economic policy alternatives, but I'm not responsible for the mess political hacks create when they decide to divvy up the pork.

If anyone is to blame for what you are complaining about, it is the conservative economic tradition from Milton Friedman onward. EITC has always been a libertarian/fiscal conservative baby as I mentioned before and which you apparently accept. This is your own mess, which you refuse to deal with and blame on other people. But then again, the definition of a conservative is someone who blames every bad outcome of their policies on someone else rather than modify their positions in light of evidence. If it was good enough for the Statutes of Edward III, there is no reason to change it now, right?

Replacing welfare with public employment?

So you have more public employees, the tax rate would have to dramatically increase to pay for all of them, requiring even more money from working people like me, which would be driven more and more into impoverishment, until we quit, and join public employment, which would drive higher taxes, driving more into impoverishment, driving more into public employment, driving higher taxes, driving more into impoverishment.

Soviet Union anyone? There's a reason they don't exist anymore. There's a reason Pre-78 China had 63% of the population living below the Chinese poverty line of $2 a day.

No, that's a horrible plan.

It's an unworkable pipe dream.

Some people can never be taught higher job skills, which makes the unskilled labor pool unsustainably large. There could never be enough jobs for everyone, particularly in any level of economic downturn.


But anyway, the OP is like one of those nutty relative's e-mails. It's a sensationalized fabrication.

Here's something that's true: General Electric, which made BILLIONS of dollars, has used tax loopholes for years. They pay ZERO dollars per year in taxes. they receive $MILLIONS in subsidies. Why not go after them instead of a poor woman making minimum wage?