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The poor don't pay payroll taxes.
www.cbpp.org ^ | Center on Budget & Policy Priorities

Posted on 01/09/2003 11:54:17 AM PST by VeniVidiVici

The demorats keep saying that the poor don't participate in the tax cuts and that they DO pay taxes via the payroll tax (ss/medicare). But the rats never mentiong the 'Earned Income (tax) Credit'. After finding brochure on a left activist website on how to encourage people to sign-up for the program, pdf file HERE ,it seems to me that not only do people that qualify under the table in the document pay very little, if any, income tax, they also pay very little if any payroll tax!

Am my assumption wrong here? Why aren't we beating the dems over the head with this? Make sure you check-out the table at the end of the brochure.

Excerpts:

Who can get the EIC (Earned Income (tax) Credit) and how much is it worth? Single or married people who worked full-time or part-time at some point in 2001 can qualify for the EIC, depending on their income.

• Workers who were raising one child in their home and had family income of less than $28,281 in 2001 can get an EIC of up to $2,428.

• Workers who were raising more than one child in their home and had family income of less than $32,121 in 2001 can get an EIC of up to $4,008.

• Workers who were not raising children in their home,were between ages 25 and 64 on December 31, 2001, and had income below $10,710 can get an EIC of up to $364.

Example:

How does the EIC work? • Eligible workers can get a check from the IRS.

Ms. Berger has two children in college and earned $19,000 in 2001. Her federal income tax for the year was $365, all of which was withheld from her pay. She is eligible for an EIC of $2,763. The EIC pays her back the $365 she paid in income tax and gives her an additional cash refund of $2,398.

Does the EIC affect welfare benefits? In most cases, the EIC does not affect eligibility for benefits like cash assistance (“welfare”), Medicaid, food stamps, SSI, or public or subsidized housing.

Can military personnel claim the EIC? Yes. Military personnel can claim the EIC, whether they live in the United States or overseas, but some special circumstances are important to note: Combat pay and allowances for housing and subsistence — including the value of meals and lodging furnished in-kind to personnel residing on military bases — are considered earned income for EIC purposes even though some of these sources of income may be nontaxable.

Can immigrant workers get the EIC? Many legal immigrants can qualify for the EIC, as long as they meet the eligibility requirements.

Workers Without Children Can also Qualify for the EIC

What about child support? Child support payments a parent receives do not count as income when determining eligibility for the EIC or the amount of the EIC.

Can military personnel claim the EIC? Yes. Military personnel can claim the EIC, whether they live in the United States or overseas, but some special circumstances are important to note: Combat pay and allowances for housing and subsistence — including the value of meals and lodging furnished in-kind to personnel residing on military bases — are considered earned income for EIC purposes even though some of these sources of income may be nontaxable.

State and local economies • EIC participation boosts state and local economies. In the first eight months of 2001 alone, nearly $31 billion in federal EIC funds flowed into the states.

Saver’s Tax Credit for 2002: Workers Can Save for Retirement

Example: Randy and Meg expect to earn $24,000 in 2002 and have two children attending college. They ordinarily would owe income tax of $415 and would qualify for an EIC of $2,143.

After paying income tax, their EIC refund would be worth $1,728 ($2,143 - $415). However, during 2002 they plan to make pre-tax salary reduction contributions of $1,000 to Meg’s retirement plan at work.This reduces their taxable income to $23,000, and lowers their income tax by $100 to $315.

Beginning in 2002, only their taxable earned income will be considered in calculating the EIC; thus, they will qualify for a higher EIC of $2,354, an increase of $211. And, they can take the Saver’s Tax Credit,worth up to 50 percent of their contribution amount, or as much as $500. The Saver’s Tax Credit eliminates their $315 income tax, and they still receive their EIC of $2,354.

Overall, by making the $1,000 contribution to Meg’s retirement account and taking the Saver’s Tax Credit, the couple gets a tax benefit of $626. (Their original income tax amount was reduced by $100 and then the remaining $315 was eliminated, for a total reduction of $415. In addition, by reducing their taxable income, they were able to claim an EIC that was $211 higher than it would have been originally: $415 + $211 = $626.)


TOPICS: Government; News/Current Events
KEYWORDS: eic; payroll; taxes; taxreform

1 posted on 01/09/2003 11:54:17 AM PST by VeniVidiVici
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To: VeniVidiVici
Sri, link is http://www.cbpp.org/eic2002/factseic-2002.pdf
2 posted on 01/09/2003 11:55:24 AM PST by VeniVidiVici
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To: VeniVidiVici
"The RATS"only believe in TAX-CUTS for those who don't pay Taxes!!Is This A Surprise???
3 posted on 01/09/2003 11:59:10 AM PST by bandleader
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To: VeniVidiVici
My kids only make a few hundred dollars a year, work for about $6.00 an hour, and neither of them gets any tax cuts or tax breaks or tax credits for low income. My daughter works at Limited part time and my son works at Target part time. They take all the usual taxes out of their checks and they do not get tax refunds. They each have a few thousand dollars in their college savings accounts, but no huge amount of money that should offset such a low paycheck. My daughter is always shocked at how much they take out of her paycheck. She only has a few hundred dollars in her savings account this year.
4 posted on 01/09/2003 12:02:23 PM PST by buffyt (Can you say President Hillary?.......Me neither....)
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To: *Taxreform; ancient_geezer
http://www.freerepublic.com/perl/bump-list
5 posted on 01/09/2003 12:10:16 PM PST by Free the USA
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To: buffyt
As long as you take a deduction for your children, the tax breaks targeted for low income families is available only to you (if you qualify). Once you stop taking them as deductions, they will be able to jump right in and grab EIC, etc., etc.

Perhaps you should start now, if you want to see them get those benies? Or might you lose more than they would gain? I suspect if, you're like most, the answer will probably be "Yes!".
6 posted on 01/09/2003 12:13:48 PM PST by Blue_Ridge_Mtn_Geek
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To: VeniVidiVici
also not figured into the equation is the amount of tax funded services the 'poor' recieve.
7 posted on 01/09/2003 12:16:27 PM PST by templar
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To: Blue_Ridge_Mtn_Geek
In reality businesses pay all the taxes for their employees. In IRS parlance businesses must collect the taxes for others. If the business goes under, the business-owner, not the employee is liable. Only businesses and the self-employed pay taxes. Most everyone else gets a refund check or earned income credit check. And they blow it!
8 posted on 01/09/2003 12:17:34 PM PST by ClaireSolt
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To: Blue_Ridge_Mtn_Geek
OK thanks! I understand now!
9 posted on 01/09/2003 12:19:54 PM PST by buffyt (Dumb ole me, I majored in Art & Spanish - I shoulda been taking MATH and SCIENCE classes!)
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To: VeniVidiVici
Why aren't we beating the dems over the head with this?

It seems you have a good point, but trying to use it in a debate with the Rats would get you labled as someone who wanted to take these benefits away. Reality is not relevant to Rat arguments.

10 posted on 01/09/2003 12:36:55 PM PST by AndyTheBear
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To: VeniVidiVici
I think this is part of the reason why the RATs' plan -- as announced by Pelosi -- did not include a payroll tax holiday. Just that $300 per person "rebate," for everybody, including the poor, whether they pay taxes or not.
11 posted on 01/09/2003 12:38:56 PM PST by aristeides
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To: aristeides
Just that $300 per person "rebate," for everybody,

Didn't we just have that from George Bush in 2001? And the Dummycrats laughed at it and said that it was worth nothing?

12 posted on 01/09/2003 1:11:34 PM PST by afraidfortherepublic
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To: buffyt
You've gotta learn to think like a Rat to understand the logic: "Earned" Income Tax Credit goes to those who did not earn or pay it. The next "logical" companion program, will be putting half of Mexico on our Social Security program. Makes sense, see? They too never earned it, so it's perfectly logical to give it to 'em. "scuse me. Time for my blood pressure pill.
13 posted on 01/09/2003 1:14:46 PM PST by holyscroller
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To: VeniVidiVici
Thanks for posting this. I have bookmarked it.
14 posted on 01/09/2003 1:33:42 PM PST by Grampa Dave (Tax Cuts/Rebates are for taxpayers and not for welfare rats and illegal aliens!)
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To: VeniVidiVici
This is a very useful post. I am copying it to my personal archive for use in battle. Thanks.
15 posted on 01/09/2003 1:45:50 PM PST by Bahbah
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To: VeniVidiVici
Thanks for posting this. Note that this document also completely undercuts a big argument for vouchers - that people deserve vouchers because "their tax money should be returned to them." Guess what - those of lower incomes (the only ones to qualify for state voucher programs) *don't pay taxes.* They don't pay federal taxes but instead get EITC "refunds" (i.e. welfare payments.) Nor do they pay property taxes (especially if they are in federally- or state-subsidized housing) and they often pay little state tax as well.
16 posted on 01/09/2003 2:10:27 PM PST by valkyrieanne
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To: VeniVidiVici
Payroll Tax - does that refer to federal withholding or to Social Security/Medicare? Or both?
17 posted on 01/09/2003 3:59:10 PM PST by 3catsanadog
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To: afraidfortherepublic
Didn't we just have that from George Bush in 2001? And the Dummycrats laughed at it and said that it was worth nothing?

"Gimmie my dern muffler" part deux?

18 posted on 01/09/2003 4:26:34 PM PST by Yo-Yo
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To: VeniVidiVici

it seems to me that not only do people that qualify under the table in the document pay very little, if any, income tax, they also pay very little if any payroll tax!

Am my assumption wrong here?

Nope:

 

A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw

http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0  


Table 1.
Preliminary Estimates of Effective Tax Rates by Income Category, 1977-1995 and Projected for 1999


Income Category 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 Projected
1999
 
Effective Individual Income Tax Rate (In percent)[Income tax plus EIC]
 
Lowest Quintile -0.6 -0.8 -0.2 -0.5 -0.2 -1.3 -1.9 -2.9 -3.4 -5.6 -6.8
Second Quintile 3.6 3.9 4.6 3.5 3.9 3.2 3.3 2.7 1.8 1.8 0.9
Middle Quintile 7.1 7.5 8.3 6.8 6.8 6.1 6.5 6.3 5.9 6.1 5.4
Fourth Quintile 9.7 10.4 11.3 9.5 9.3 8.7 8.9 8.7 8.5 8.7 8.4
Highest Quintile 15.8 16.3 17.1 14.5 14.3 15.1 15.1 14.8 15.5 16.2 16.1
 
All Families 11.1 11.6 12.6 10.7 10.7 10.8 10.9 10.5 10.9 11.3 11.1
 
Top 10 Percent 17.6 18.0 18.7 15.9 15.6 16.9 16.6 16.3 17.4 18.2 18.0
Top 5 Percent 19.3 19.7 20.0 17.1 16.8 18.5 18.0 17.6 19.3 20.0 19.6
Top 1 Percent 23.1 22.6 22.0 19.3 18.7 20.9 19.7 19.9 22.8 23.4 22.2
 
Effective Total Federal Tax Rate (In percent)[includes payroll taxes]
 
Lowest Quintile 8.7 8.4 8.0 8.5 10.2 9.0 8.8 7.9 7.8 6.0 4.6
Second Quintile 14.7 14.9 15.0 14.2 15.5 15.2 15.3 15.1 14.3 14.6 13.7
Middle Quintile 18.5 19.2 19.5 18.2 18.8 18.5 18.9 18.9 19.1 19.7 18.9
Fourth Quintile 20.9 22.1 22.9 21.0 21.3 21.2 21.5 21.6 22.0 22.5 22.2
Highest Quintile 28.2 28.5 27.9 24.6 24.5 26.4 25.9 26.2 27.6 29.6 29.1
 
All Families 22.8 23.4 23.5 21.4 21.8 22.6 22.5 22.6 23.5 24.7 24.2
 
Top 10 Percent 30.7 30.5 29.0 25.2 25.1 27.6 26.8 27.2 29.0 31.3 30.6
Top 5 Percent 33.4 32.6 30.1 25.7 25.5 28.5 27.4 27.9 30.2 33.0 31.8
Top 1 Percent 39.7 37.3 31.7 26.9 26.2 30.2 28.1 29.1 32.5 36.5 34.4

SOURCE: Congressional Budget Office.
NOTES:Pretax family income is the sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, and all cash transfer payments. Income also includes the corporate income tax and the employer share of Social Security and federal unemployment insurance payroll taxes. For purposes of ranking by adjusted family income, income for each family is divided by the poverty threshold for a family of that size. Quintiles contain equal numbers of people. Families with zero or negative income are excluded from the lowest income category but are included in the total.
Individual income taxes are distributed directly to families paying those taxes. Payroll taxes are distributed to families paying those taxes directly, or indirectly through their employers. Federal excise taxes are distributed to families according to their consumption of the taxed good or service. Corporate income taxes are distributed to families according to their share of capital income.

19 posted on 01/09/2003 4:35:51 PM PST by ancient_geezer
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To: 3catsanadog
Thanks to all who replied. I just don't know why the EITC isn't brought up in debate over "who should get tax rebates/cuts" more often. Another poster's reply that the left will just say we want to take it away if we are using that as an argument certainly makes sense, and is the only reason I can guess that the Republicans don't bring it up.

For those of you that don't know, Reagan implemented the EITC and Clinton doubled it.

I must apologize for the misspellings and typos of my initial post. It was my first thread (several replies to existing threads though) and I guess I still have to learn the ropes. I did do the draft in a text file and it looked ok in my browser (even the link)!

3catsanadog, the payroll taxes are the taxes deducted from you paycheck to include fed/state/ss/medicare. Of course people in the lower brackets get most if not all of the fed/state back but not ss/medicare. So in the context of the left's argument that the poor still pay payroll tax, I assume they are referring to ss/medicare.
20 posted on 01/10/2003 11:22:14 AM PST by VeniVidiVici
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To: VeniVidiVici
Why don't Republicans bring up the EITC? For one thing, human nature - when you do something so fundamentally opposed to your principles, it's embarrassing to admit you did it. For another, the EITC is a way to surreptitiously slip welfare benefits in the back door while ostensibly sweeping them out the front. It lets you make points with mushy-middle voters while changing nothing substantial. Finally, Republicans don't bring up the EITC these days because it's devastating to the argument for school vouchers. Everywhere you turn around, someone is claiming "let's let the parents keep their tax money." Guess what - they *don't pay taxes to start with.* The Emperor has no clothes in this argument.
21 posted on 01/11/2003 12:59:17 PM PST by valkyrieanne
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