About that Earned Income Tax Credit

One wonders whether the left-of-center policy group that put out a news release this week calling for restoration of North Carolina’s Earned Income Tax Credit realized that its plea fell within the same news cycle as another EITC-related item documented by outlets such as Human Events.

A new government report says the IRS is making little progress in reducing improper payments of Earned Income Tax Credits — allowing more than $13 billion to slip through last fiscal year.

The IRS itself admits that roughly one-quarter of EITC payments were issued improperly in fiscal year 2013. The dollar value of these improper payments was estimated to be between $13.3 billion and $15.6 billion.

“The IRS can and must do more to protect taxpayer dollars from waste, fraud and abuse,” said J. Russell George, Treasury inspector General for Tax Administration (TIGTA).

On its EITC webpage, titled “It’s Easier Than Ever,” the IRS says the credit “help(s) you keep more of what you earned.”

“Don’t miss out if you made less than $51,567 … even if you do not owe any tax or not required to file,” the page states in both English and Spanish.

TIGTA did not make any recommendations in its report, which pointed to a persistent pattern of improper payouts. Watchdog.org reported last year that the IRS applied an estimated $11.6 billion in faulty credits in 2012.

Yes, there is a difference between a state and federal EITC. But those who qualified for the federal credit automatically qualified for the now-discarded North Carolina credit. Why would state officials want to reopen the door to the waste, fraud, and abuse associated with the federal program? Wouldn’t it be better to support a tax reform that lowers rates for everybody, creating tax cuts for every income group?

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