The earned income tax credit (“EITC”) became part of the Internal Revenue Code in the Tax Reduction Act of 1975. The purpose was to provide a way for qualified lower income workers with families to receive some of the income tax dollars they paid during the year back when they filed their income tax returns the next year. The EITC then and still does not offset any of the payroll taxes lower income workers paid—generally the highest federal tax lower income workers pay.
The EITC, as its name states, provides an income tax credit and not an income tax deduction. For example, if $5,000 in federal income taxes was withheld and the taxpayer received a $3,000 income tax credit, the IRS would send the taxpayer a refund of $3,000. It is actually just getting back their own money but it is still money the taxpayer can use.
Contrast this with a $3,000 deduction. The $3,000 will reduce your total taxable income by $3,000. For example, if your income was $50,000 and you were in the 15% federal income tax bracket, your taxable income would be reduced to $47,000. This would save you 15% of $3,000 or $450.00—a difference of $2,550.
Many agree lower income working parents have a very hard time making ends meet. However, in the tradition of Congress and the Swamp, the EITC is very complex and requires over 50% of the EITC filers to use professional preparers.
Turbo Tax On The EITC
How complex? The following information was posted on the Turbo Tax website. To qualify for and claim the EIC you must:
- Have earned income; and
- Have been a U.S. citizen or resident alien for the entire tax year; and
- Have a valid Social Security number (not an ITIN) for yourself, your spouse (if filing jointly), and any qualifying children on your return; and
- Not have investment income exceeding $3,500; and
- Not be filing a Form 2555 or 2555-EZ; and
- File a return with the Single, Married Filing Jointly, Head of Household, or Qualifying Widower filing status, even if you're not required to file a return.
Additionally, both your earned income and Adjusted Gross Income (AGI) can't exceed:
- $15,270 if you're not claiming a qualifying child ($20,950 if filing jointly);
- $40,320 if you're claiming 1 qualifying child ($46,010 if filing jointly);
- $45,802 if you're claiming 2 qualifying children ($51,492 if filing jointly);
- $49,194 if you're claiming 3+ qualifying children ($54,884 if filing jointly).
There's more – if you're not claiming a qualifying child:
- You (or your jointly filing spouse) must have been born on or after 1/1/1954; and
- You (or your jointly filing spouse) must have been born on or before 12/31/1993; and
- You (and your jointly filing spouse) cannot be claimed as a qualifying child or dependent on anyone else's return.
This data doesn’t tell you how to file for the EITC but it sure is intimidating.
EITC Fraud & Punishment Of Work
- The IRS estimates between 21% to 26% of EITC claims are paid in error. Some of the errors are unintentional caused by the complexity of the law, but some of the claims are intentional disregard of the law. Others speculate this number could be much higher.
- In addition, as the lower income parents earn more money, they start to receive less of an income tax credit. You can see from the information on the Turbo Tax page, people might turn down a raise because it will net them less than they could make from the EITC.
- There is an incentive for lower income working parents to reduce the amount of their “taxable” income by not reporting some of their income to qualify for more EITC.
Conclusion
Instead of this EITC nonsense, look at the difference for working families when the FAIRtax becomes law:
- They will receive their entire paycheck not reduced by federal income/payroll tax deductions
- They will receive the tax credit, the Prebate, allowing a family of 4 to pay no FAIRtax on the first $32,000 of spending on new goods and services.
- If the family spends some of their income on used goods, there is no FAIRtax.
- There would be no complicated tax returns to file and no records to keep.
- The disincentive to not earn as much as you can disappears, because you are taxed only on your purchases, not what you earn.
The leaders of the Swamp aren't stupid. They have their evil plan. They work with their “pals” in Congress to protect the income/payroll tax system because of the income it generates for them. They know the FAIRtax would effectively eliminate the need for EITC-like credits to lower income working families but because it will reduce their income and control, they oppose it.
The Swamp and their pals know the FAIRtax is the best way to fund government. If there are still working families needing additional assistance, then Congress and/or the state legislatures can pass spending measures for these people.
Isn’t it time to stop looking at band-aids and start looking at curing the problem?
The author George Bernard Shaw said, "You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?” Isn’t it time to take back control from D.C.?
We say to you President Trump, “Embrace the FAIRtax and real tax reform! Stand up to The Swamp. They will oppose you anyway because they see you as a threat. What have you got to lose?”
It's time to PASS THE FAIRTAX!
The truth is the truth. Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future: “If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO?
Call the local or D.C. office of your House Member and 2 Senators and you can use the following script:
- I am sure that Representative ____ or Senator ____ is in favor of everyone obeying the income tax laws.
- After they assure you their boss is not in favor of anyone breaking the law, ask if they are aware of the Cebula study showing $9 trillion of evaded income/payroll taxes over the next ten years.
- Since most will say they don’t believe their boss has seen the study, either drop off a copy or get an email address and send a copy to them for their boss.
- Say you are going to call back in a week and ask what the Representative or Senator is going to do to stop this evasion.
- In a week, call back and ask specifically what the Representative or Senator is going to do to enforce the law.
- They probably will say their boss believes simplifying the income tax will handle the problem.
- Explain, when people evade income taxes, they are also evading the 15.3% payroll/Medicare tax and state income tax. So, it is unlikely they are going to pay 30% or 40% when they were paying 0% because they have already decided it is okay to cheat.
- Say, the only way to reduce evasion is to increase by tens or hundreds of thousands the number of comprehensive IRS audits done each year.
- Point out Evaders do not self-identify by putting an “E” on their income tax return.
- 80% of the people likely to be audited are trying to comply, but they will be forced to endure these IRS audits as well.
- Ask if the Member is in favor of this?
- If they say no, then ask again how the Member proposes to stop people breaking the income tax laws.
- Then explain the way to handle evasion without unleashing the IRS audits is the FAIRtax.
- If you can see your Member or attend a town hall and ask these questions, you can be even more effective.
FAIRTAX POWER RADIO PODCAST & DIGITAL TV SHOW
#162 The Income Tax - A National Embarrassment!
You probably know the Royal baby, Archie, was recently born to Prince Harry and Megan Markle in England. But did you know because his mom is an American citizen, baby Archie (Archie Harrison Mountbatten-Windsor) may owe the IRS taxes already? How ridiculous is it, a baby born in another country has to deal with our byzantine income tax system here in the US? What an embarrassment for our country.
Did you also know over 5,000 people each year renounce their US citizen ship and a big reason why is the income tax? Yes, our income tax system is not only driving our companies overseas, it’s causing many Americans who live and work overseas to renounce their citizenship. What an embarrassment for our country.
But wait, there’s more! However, you have to listen to the podcast or watch the digital TV show to find out.
We have been Live streaming FTPR to Facebook every week for almost a year now. But now, FAIRtax Power Radio will be Live streamed to YouTube also. Watch for announcements and then go to our YouTube Channel.This is a great alternative if you’re not a Facebook user.
If you are a Facebook user, check out our Live stream at 11:30am ET on facebook.com/fairtax. Remember, Live stream also means Live comments. Join the show.
However, if you can’t catch the Live show, just go to FAIRtax Guys to see our latest effort in getting the FAIRtax news spread far and wide. This new website is open to everyone; no subscription or “joining” is necessary. Just dive right in!
FTPR podcasts for each show are posted on Spreaker, iTunes & iHeart Radio every Friday morning. Since it’s a podcast, you can download it and play it whenever it’s convenient for you. A free FAIRtax Power Radio app is available for iOS and Android.
If you believe the FAIRtax is good for America, PLEASE let others know by turning them onto FAIRtax Power Radio - the ONLY weekly FAIRtax digital TV show in the country! Watch every Wednesday at 11:30am (ET) on Facebook LIVE. And look for us on our YouTube Channel. If you can’t watch live or you don’t use Facebook, go to FAIRtax Guys to watch the show and keep up with the latest events.
Please help us educate as many Americans about the FAIRtax as possible. Be sure to tell everyone you know about this great format for FAIRtax Power Radio. Whether you watch the weekly TV show or listen to the weekly podcast, this is a great way for more Americans to learn about the best tax reform plan in Congress at this time.
Remember, FTPR digital TV every week on Facebook and YouTube followed by the podcast on Friday morning and the new website FAIRtax Guys anytime. Please watch, listen and tell everyone you know about FAIRtax Power Radio. The FAIRtax: Once You Understand It, You’ll Demand It!
Links To More Information
These links will help you promote and support the FAIRtax, make yourself familiar with the links below. We always do our best to keep our AFFT community up to date, and you can stay ahead of the curve using these convenient sites.
Americans for Fair Taxation
The FAIRtax Guys
Americans for Fair Taxation Facebook Page
The FAIRtax Guys Facebook Page
Americans for Fair Taxation Twitter Page
PopVox - The People’s Voice on all things legislative
Americans For Fair Taxation YouTube Channel
The FAIRtax Guys YouTube Channel
Official FAIRtax Logo Store
Read Evasion Study Summary
American's Big Solution - The FAIRtax Primer America Needs
Hard to believe but there still are people who have not heard of the FAIRtax. For those people, America’s Big Solution provides a starting point in their study the FAIRtax and is meant for people of any age. And you can download it to your tablet or smartphone right now. It’s also available in print form. See below.
Do you know someone who would like an introduction to the FAIRtax and would prefer to read about it in a booklet rather than search online for Tweets, Posts and Shares? If so, America’s Big Solution is their best choice.
America’s Big Solution is an introduction to the FAIRtax written by Terry Tibbetts, author of A Spartan Game: The Life and Loss of Don Holleder, with help from Ron Maiellaro, President of the Florida FAIRtax Educational Association. You can buy an electronic version of ABS as follows: AMERICA’S BIG SOLUTION is available for only $2.99 for the Amazon Kindle, the Barnes & Noble Nook and Apple iOS.
You can purchase a print copy at the same Amazon link above for $9.25. Regardless of whether you choose the electronic format or the print format, you’ll find AMERICA’S BIG SOLUTION will give someone the boost they need to begin their study of the FAIRtax and the suggested resources to learn more. Buy AMERICA’S BIG SOLUTION now!
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