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Arkansas PoliticsBigger GovernmentReadTaxes/Government Spending

Please Not EITC Again!

by Conduit For Action

Governor Asa Hutchinson has delayed his special session that was to be called to adopt income tax cuts. Basically, the special session was to be an opportunity to tithe back some of the tax increases he championed as governor before legislators must face the voters.

Now we are hearing EITC might be added to the tax plan. Please, not that redistribution of wealth scam that keeps being proposed.

What is EITC? It stands for “Earned Income Tax Credit.” The name sounds good but the program is not. Although the word “earned” is used in the name, there is nothing “earned” about it and it is not a tax credit. The EITC doesn’t give back a portion of the income taxes a person has paid, instead it gives an eligible person FREE MONEY. It is just another government entitlement, but instead of being in the welfare laws it is disguised as an income tax credit.

Who pays for the EITC giveaway? Taxpayers!

Even if you wanted to create another government entitlement, this is NOT the way to do it. The federal government has an EITC provision and even the IRS has criticized EITC as the tax provision most subject to fraud and mistake.

The IRS estimates that between 21 percent to 26 percent of federal EITC claims are paid in error. That is HUGE percentage. The IRS says some of this is due to: (1) unintentional errors because the law is complex, and (2) FRAUD.[i]

According to the IRS, some people scam the system by inflating the amount of income they report so they can maximize how much they will make off of taxpayers through the EITC and other refundable credits.[ii] In other words a fraudster who doesn’t work at all can scam the system by claiming he was self-employed and made just enough income from odd jobs that (SURPRISE!) he doesn’t have to pay any income tax AND qualifies to get free money from you through the EITC.

The IRS says another way people commit fraud is by under reporting income to pay less tax. EITC makes this fraud even worse because the underreporting may also make the person eligible for FREE MONEY under EITC.  For example, a self-employed person may hide income from the IRS by not reporting cash received or checks cashed at the payer’s bank, then on top of that fraud, claim the EITC payment. Not only does the fraudster not pay taxes on his income, he gets free money from you the taxpayer as an EITC payment.

The only person in the legislature who has pushed passage of EITC is the Governor’s nephew Senator Jim Hendren. Hendren spent years disguised as a Republican but when he couldn’t pull off that charade anymore because everyone knew he was a RINO, he declared himself an independent and is working to elect liberal candidates.

With EITC being mentioned again people are now asking what office Jim Hendren is running for? Uncle Asa owes nephew Jim big for helping push through Asa’s big government programs and tax increases. If the plan is to help Jim run for some office by passing EITC, the taxpayers will be stuck with the bill for the gift.

Tell your state Senator and state Representative to say “No” to EITC and instead to pass REAL and SIGNIFICANT tax cuts.

 


[i] https://www.eitc.irs.gov/tax-preparer-toolkit/frequently-asked-questions/fraud/fraud

[ii] https://www.journalofaccountancy.com/news/2019/mar/2019-irs-dirty-dozen-tax-scams-201920830.html and https://www.journalofaccountancy.com/news/2019/mar/2019-irs-dirty-dozen-tax-scams-201920830.html

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