It’s tough to support one’s self on $8,000 a year.
It is why Uncle Sam has the Earned Income Tax Credit.
A single adult between the ages of 25 and 64 making up to $15,000 a year can qualify for money from the government at tax time in the form of the EITC. The peak benefit of $503 goes to those earning between $7,000 and $8,000 a year.
Two political polar opposites — President Barrack Obama and Republican Representative Paul Ryan — embrace kicking up the maximum benefits for single adults to $1,005 with the credit ending at $18,000. The maximum benefit of $1,005 would go to those who earned between $6,000 and $14,000 a year. Obama wants to pay for the increased EITC benefits by raising taxes by closing loopholes that allow small businesses and professionals to avoid self-employment taxes. Ryan wants to fund the EITC by cutting specific federal spending.
But there’s another issue that should give honest taxpaying Americans pause before embracing either plan to expand the EITC.
The Government Accountability Office indicated in 2014 errors, fraud, and failure to verify income along with the complex nature of filing for the credit resulted in $14.5 billion going to people who weren’t eligible for the income transfer benefit. That’s $47 for every man, woman, and child that was lost in 2014 through fraud or errors last year with just the EITC credit. It means 27.2 cents of every EITC dollar is lost to fraud and errors.
That’s the good news.
Altogether the GAO puts federal government losses in 2014 for “improper pavements” at $124.7 billion. This isn’t taxes not collected. It’s not government waste. It is tax dollars Uncle Sam took from honest taxpayers and gave away either through fraud or errors that weren’t caught by bureaucrats. That comes to $404 per American lost last year through fraud and errors involving “improper payments.”
If Apple operated like the government, they would be bankrupt and out of business. The government loss due just to fraud and errors involving improper payments is almost seven times higher than the $18.04 billion profit Apple posted in the first quarter of this year.
Apple’s profits in the first quarter set a record for corporations.
Apple is soaring to new historic heights in terms of legitimately making profit. At the same time the government is setting records itself making improper payments as they soared 17.9 percent by going up by $19 billion between 2013 and 2014.
Imagine if the government made stopping fraud the highest priority by simplifying forms, verifying information submitted whether it is for the EITC or other programs, and terminating employees that have high error rates when it comes to improper payments.
The IRS likes to push people toward electronic filing and then brag how they quickly return excess money they took from taxpayers that wasn’t the government’s in the first place.
Little wonder this year that massive fraud was unearthed in electronic filings of income tax returns.
It’s obvious the government continues to make stopping fraud the lowest possible priority. So that means any expansion of payment programs such as an EITC means 27 percent of whatever more money is thrown at it will be claimed by mistake or fraudulently obtained due to Uncle Sam’s repeated inability to simplify forms and put in place a verification system.
That’s why April 15 for some people isn’t tax day but “Rip off the Rest of Us Day” thanks to collusion from the federal government.
This column is the opinion of Dennis Wyatt and does not necessarily represent the opinion of The Journal or Morris Newspaper Corp. of CA. He can be contacted at dwyatt@mantecabulletin.com or 209.249.3519.
