Antipoverty Tax Program Offers Relief, Though Often Temporary

New York Times ^ | April 17, 2012 | SABRINA TAVERNISE

[reaganaut1]

...

It is tax time, the season when the country’s largest antipoverty program, the earned income tax credit, plows billions of dollars into mailboxes and bank accounts of low-income working Americans like Ms. Spain. It is the most important financial moment of the year for many people in the bottom half of the wage bracket, a time to pay off old bills, make car repairs, buy children clothes and maybe make a big purchase like a refrigerator or a TV.

As incomes among the country’s lowest wage earners continue to stagnate, the credit has played a critical role in smoothing the hard edges of an unforgiving labor market for the country’s most vulnerable workers and helping stem the tide of income inequality that has been rising among Americans in recent decades.

Nearly one in five filers now receive the credit — about 28 million returns in the 2010 tax year, the most recent year figures are available — representing the highest percentage since the program began in the 1970s, according to the Brookings Institution.

The effect has been significant. The Center on Budget and Policy Priorities, a research group based in Washington, estimates the credit lifted about six million Americans out of poverty last year.

“We find clear evidence that the E.I.T.C. has significantly reduced poverty rates and income inequality,” said Raj Chetty, an economist at Harvard who has studied the subsidy’s effect across cities. “The program is pulling up the lower end of the income distribution.”

The credit also seems to have an important psychological side effect: It makes people feel middle class.

“You get this feeling of, ‘Hey, I’m like them now,’ “ said Wesley Rouse, 27, a property manager in Durham.

[reaganaut1]

Getting a larger "refund" than was paid in taxes is welfare, and it should be stopped.

[SampleMan]

Not just welfare. More of a King’s indulgence to the poor, with the same intent of buying loyalty. An insult to the very core of a free peoples.

Unfortunately, many of our countryman have no desire to be free, because it is too difficult for them. If we cannot sway them, the only opportunity left to prevent being subjected, will be to win the struggle of being in command.

I hate to think that we are destroying the only historical example of individual liberty in action.

[Aevery_Freeman]

At the local coffee shop this time of year is exciting. It affords them the opportunity to purchase a car.

This showed me two things:

• The "bastard child credit" (EITC) is much larger than I ever expected
• The "Cash for Clunkers" program has been around for a long time

[jiggyboy]

a time to pay off old bills, make car repairs, buy children clothes and maybe make a big purchase like a refrigerator or a TV.

Maybe, but this year, almost certainly not. Any EIC money this year is going straight to the mortgage or the rent, as unemployment is not just still bad, but getting worse.