Tom Rittenhouse wrote:
>Let's see if I understand you. Are you saying that many
>americans pay no taxes and get a $3000 tax refund?
Hi Tom,
Not quite what I'm saying, but close. Many American families who have
earned income (i.e., from wages and tips) qualify for the federal Earned
Income Credit, or EIC. This is a credit an individual receives based on the
number of dependents and the size of his/her income. This is a credit, not
an exemption -- that is, an individual could theoretically receive a large
credit, even if he/she had absolutely no tax liability. The credit for
which a taxpayer is eligible increases as his/her earned income increases,
but then scales off at a certain income level and falls back toward zero
credit. I'm afraid many of the working poor (and those with large families
but marginal incomes) are perhaps unaware of this credit. Many young
families barely scraping by think they're getting ahead by working "under
the table". I wish I could tell every one of them that they're better off
in many cases by reporting their income, paying Social Security and Medicare
taxes, then filing a return at the end of the year in order to receive the
EIC. Why, it's even possible to get advance EIC payments (during the tax
year, rather than in one lump the following April) and thereby reduce the
financial impact of payroll tax withholding during the year.
EIC is a godsend for a lot of families, and I think you can tell by my tone
that I don't begrudge any of them one cent of it. The way I figure, I'm
"fortunate" enough -- at least at the present time -- to have a fairly high
tax burden. Not getting rich, but not anywhere close to hungry. I want to
make sure that those who qualify for help from the government are getting
everthing for which they're eligible. And would you believe I voted for
Ronald Reagan -- twice? I guess that makes me a Jack Kemp liberal....
Hope this answers your question.
Bill Peifer
Rochester, NY
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