I did not think there would come to a time where I woudl disagree with Polycarp, and agree with Whack-a-mole all at the same time (no offense whack, it is just that I usually agree with Poly).
It is just the lying by calling a form of welfare as a “tax credit” and calling it “Earned Income Credit” to boot. Of course, it easily could be make = to the payroll taxes, if that is what Congress wanted.
Nothing wrong with the concept of helping those less lucky or able, but I’d prefer it to be more openly.
Well, the way I figure it, a married couple with two children, a reasonable mortgage and such, earning between 40-50k, will have a negative Federal Income Tax liability.
Doesn’t sound right to me. We’re paying people to have kids. At 50k you don’t need and shouldn’t get Federal aid.
God help us, it’s the end of Democracy once the politicians and voters realize you can just vote yourself money.
If a person is getting $4,000 back then it is likely that person didn’t pay a combined Fed tax and Social security tax of $4,000. That person will also get back the Social Security tax in the form of Social Security.
Looks like welfare to me. I wish they would change the name of the Earned Income Tax Credit to “Uncle Sam’s wealth redistribution program for the working impaired”.
I’m no social engineer but I started to look at the world around me when I was about 10 years old. At the time I thought long-term welfare (as opposed to short-term welfare) was a government sponsored voter breeding program. Haven’t changed my mind. Long-term welfare families breed more welfare families. It’s a vicious cycle that enslaves generation after generation.
Of course a family of five on a low income spends all of the money they earn.
You said that your calculations were based on SALES tax. You do not pay sales tax on rent, elec, water, and in some states on food. Lower income families do not pay sales tax on all (or even most) of their income.
Put the numbers together on this one, Scylla. I hate playing “Cite?!” with you because what you say is either grounded in fact or in your considered opinions, but I’ve run numbers for specific couples (my “kids”) with children and low incomes, and the gross income you suggest in that post is waaay too high for maximum benefit – in fact, the year Michael drove cab all year, we had to ignore a large part deductible expenses he could have claimed in doing his Self-Employment figures in order to get them to the income level where they would get the best EIC figures – in short, he was claiming “more” income than he actually got in true net income from the “business” (he was legally an independent contractor paying for gas and a share of his gross to the cab company for use of their vehicle and having calls dispatched to him). So I’d be very skeptical, absent proof, that a $40K-50K gross household income would garner any EIC.
The comments about “evil” welfare were based on the tone of the comments, the implication that EIC was actually a form of welfare benefits disguised. What I see it as, is a reward for being largely self-supporting but at an income level where your income scarcely meets your expenses – precisely the opposite of what has irked people about welfare.
As for the comment about “paying people for having kids” – no, if we’re doing anything in social engineering, we’re assuming that society has a stake in having the children – who will grow up to be the taxpayers when we’re elderly – properly provided for, and therefore modifying what we assume each person’s proportionate share of the costs of government by the expenses they incur in providing for children in their care. I find this to be a laudable step in dealing with the reality that while all people are legally equal, all people are not socially or financially equal, and that some are shouldering a disproportionate share of the burden we all share.
Me too, though I haven’t run numbers for such a scenario to see where it would be.
I was thinking about the recent debate surrounding the child tax credit going to families that pay no income taxes that’s just been added back into the tax bill.
Surely you see how a married couple with two kids a mortgage and other reasonable standards would pay no Federal income taxes yet still get a rebate, or do I need to play with the numbers?
And I apologize for the confusion. It seems from context that it appears I was talking about the EIC rather than the child credit so I’m sorry I didn’t clarify what I was referring to.
This issue doesn’t affect me because I’m Canadian, but I’d like to respond to those who feel it neccessary to classify a child tax credit as welfare with the implication that it is undeserved. Why can we not accept that the children of this nation regardless of their parent’s wealth and earning capacity are deserving of a start up share of the wealth of the nation? Why can we not assume that all the little citizens should claim a reasonable minimal heritage from the commonwealth?
Since most people are criticizing your numbers from one angle, I’ll note a problem from another: You have included only the part of FICA paid by the employee. In fact, I believe that every serious economist agrees that the FICA tax paid by the employer also mainly comes out of the employee’s income. [Hell, conservatives like to argue this sort of thing all the time, claiming corporate taxes are really paid by the consumer and the like. But, unlike their cases where the connection is weak, even tangential, here the connection is very strong. I.e., the FICA tax is tied to the employee so strongly that there is essentially no difference between saying the employer pays the tax or saying the employer pays the employee 7% more and the employee then pays the tax.]
Well, one of the problems we have is that everyone sees the conventional forms of welfare, but noone sees the more non-conventional forms. So, for example, when the costs of sprawl are subsidized, the person moving into a newly-built house does not generally notice the welfare that was paid in the form of the sewer and other services. When someone hops in their Hummer, they do not see the welfare that was paid in the form of the various ways gasoline prices are subsidized, both directly and through the externalized costs associated with automobile use.
And, of course, in any society, there are people deriving all sorts of benefits from government and people paying money and there is no guarantee that the benefits and money paid equal out. Many of us think it is pretty much of a no-brainer to realize that those who have benefitted the most from society are probably the ones who are the wealthiest rather than those who are homeless on the street. [Could you imagine Bill Gates ever making even $10 million, let alone $100 billion without the benefits of government to enforce contracts, corporate law, patent rights, …?]
To give jshore credit, the statement made tied specific taxes to specific people (employees) to the point that doing the math is very easy-- you just double it. It’s hard to determine how much of GM’s corporate income tax I paid the last time I bought a car from them.
But your point is well taken. Only people pay taxes, not entities.
To answer the OP you have to define “welfare”. One broad definition could be: income redistributed by government from one group to another. In that event, tax deductions are welfare as they are redistribution of income. Child credits are welfare for people with children by (on average) redirecting income from the childless. Mortgage interest credits are welfare for home owners at the expense of renters.
Personally, I would do away with all deductions. How much do you earn? Send x%. It would sure put a lot of CPAs and tax lawyers out of business.
While it is true that my rent is not subject to sales tax, it does carry in it a substantial portion which is my landlord’s property tax. Typically, from 20 to 40 percent of residential property rent is attributable to the landlord’s property tax.
As for utility bills, the ones I get are generally subject to sales tax. The sale of electricity is still a taxable sale. Even telephone service, although not a tangible good like water or electricity (and thus not taxable as a sale of goods), is still taxed under a separate taxing regime for telecommunication services. The only common utility that I would expect not to be subject to sales taxation would be garbage service, in those communities where it is not provided by the municipality.
Please don’t tell me that you’re claiming that an $80 cell phone contract is anything other than a luxury.
I actually don’t worry about the tax weekends, but I pretty much do exactly this. As a kid, 3/4 of my new clothes were bought at back-to-school time. As an adult, I do the same thing unless I come into unexpected money or have a sudden need for a certain item.
Perhaps because neither Texas nor Florida have any state income taxes. (as well as several other states.)
Precisely. We have chosen, wisely or not, to use our tax system to advance all sorts of social and economic goals. Every deduction that’s authorized represents a decision to take money from one group of people and give it to another group.
It would be interesting, indeed, to decouple our tax system from the promotion of social and economic goals. No deductions, as amarone suggests, though you don’t need to go for a “flat tax” as well. In other words, you pay tax on your gross income, but the rates are progressive - the more you make, the higher percentage of your gross you pay.
Want to buy a house, with a mortgage, instead of renting? Fine - your choice. Want to have children? Good for you - your choice. Want to give money to charity? Noble sentiment - your choice. In no case would the tax system reward or penalize you for your choices.
But should the Government encourage home ownership, on the well-founded theory that it helps the economy? If the answer is yes, then let Congress pass legislation whereby the Government pays, say, 20% of your mortgage payment. Should the Government encourage people to have children? If yes, then pass a bill to send a check to every parent.
You can argue that the net effect would the same as the current system, and you might be right, but at least the Government would be more up-front about what its objectives are. Instead of cloaking its income redistribution decisions in arcane tax codes, those decisions would be far more transparent, and some of the choices might not be the same under those conditions.
A family with $50,000 of gross income, husband, wife, and two children, filing jointly, and with no other deductions or adjustments would receive an EIC of $854 under 2002 rules and tables. For married filing jointly, the maximum gross income to receive any EIC (again, under 2002 rules and tables) is $47,050 for one child and $54,028 for two children. Add $3000 for each additional child beyond two.
It would be interesting indeed. But even the most strident tax reformers (like Dick Armey) cannot bring themselves to eleminate the child deduction. I think if God knew how shamelessly we were going to use children to justify various legislation he never would’ve allowed us to have them.
I’m also surprised by how people don’t expect the price mechanism inherent in the market to adjust for tax policy. If the home mortgage deduction were elimintated tomorrow, does anyone serious think that home prices would not drop? If the deduction were increased does anyone seriously think that home prices would not rise?
I agree that any tax deduction can be considered to be welfare for the recipient of that deduction.
To answer the OP you have to define “welfare”. One broad definition could be: income redistributed by government from one group to another. In that event, tax deductions are welfare as they are redistribution of income. Child credits are welfare for people with children by (on average) redirecting income from the childless. Mortgage interest credits are welfare for home owners at the expense of renters.
Above quote by Amarone.
Even with your broad definition, unless you are saying that all my earned income belongs to the government, there is no redistribution by reducing my taxes. I just get to keep more of my own money. If you really think that all income is initially owned by the government all I can say is that I disagree.
It is actually extremely clever of liberals to define welfare that way, as in general welfare has a derogatory connotation akin to freeloader. The power of words.
You’d be right if, when your taxes were reduced, total Government spending were reduced by the same amount. But it never is (at least, not when the GOP is in power ). When your taxes are reduced, but Government spending continues to rise, someone else has to cover the cost, either now, through higher taxes, or later, when subsequent taxpayers have to service the national debt. Letting you “keep more of your own money” involves taking away someone else’s money.
Some of it could be being paid by the shareholders, for example. Or, some of it could be absorbed into the costs of doing business in other ways (e.g., reduced spending on equipment or lower salary for the CEO or other workers).
The claim is not that all income is owned by the government. But, all of it isn’t owned by the individual either since, if it were, there would not be the roads you drove on to get to work to earn it, to give one example. Our society is sufficiently interactive that it is impossible to set out who is exactly entitled to what. So, we make some rules (e.g., you are entitled to the income that others pay you but with a certain amount of it taken to support the government services you and others rely on). But, this division is not perfect … It is somewhat arbitrary.
Or, looked at from the other point of view, it is extremely clever for conservatives to define as “welfare” and “redistribution” almost any policy that effectively tends to redistribute money downward to the poor and to define as “good economic policy”, “stimulus”, or “pro-growth” almost any policy that distributes money upward, allowing great concentrations of wealth in the power of a few people.
). When your taxes are reduced, but Government spending continues to rise, someone else has to cover the cost, either now, through higher taxes, or later, when subsequent taxpayers have to service the national debt. Letting you “keep more of your own money” involves taking away someone else’s money.