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>using the existing baroque complexity of the tax code as the reason not to simplify it. One huge challenge is the fact that a lot of welfare is embedded into

>using the existing baroque complexity of the tax code as the reason not to simplify it. One huge challenge is the fact that a lot of welfare is embedded into the system as tax credits. That is why it is so complicated to be sure the correct taxpayer gets to claim a child, since the credits amount to potentially many thousands of dollars. If this welfare money instead was delivered directly instead of via tax credits, then yes a lot of the complexity could be removed, but it's been this way so long, there is a lot of inertia.

WorldMaker 4y ago
Tax credits are not and cannot ever be actual welfare if they aren't money in hand. There's definitely a "wish it was welfare" aspect to many of the tax credits in that they supposedly help groups like families (and, uh, corporations) get a lower tax rate, but most tax credits really are just an indication that the base tax rates aren't correctly-sized versus societal needs and could be deeply simplified. There is indeed a lot of inertia from the "wish it was welfare" feeling giving a lot of reasons for people (and corporations, lol) to claw for keeping many of the tax credits in play because it does save them money in a noticeable way to their bottom line that also makes them feel like they "deserve it" (for "hard work" or other "earned" reasons) and that could be greatly simplified indeed by, I don't know, maybe correctly investing in real welfare projects instead.
- dragonwriter 4y ago
  > Tax credits are not and cannot ever be actual welfare if they aren’t money in hand. Refundable tax credits are money in hand. (They may be delayed money in hand, but effectively that’s just welfare with eligibility determined with a lag, which is fairly common, though the lag for tax credits is longer than for most other welfare programs.) But the main “welfare-like” tax credit (EITC) is also advanceable (via the W-5 process) as well as refundable, which removes the delayed aspect, too.

WorldMaker 4y ago

Tax credits are not and cannot ever be actual welfare if they aren't money in hand. There's definitely a "wish it was welfare" aspect to many of the tax credits in that they supposedly help groups like families (and, uh, corporations) get a lower tax rate, but most tax credits really are just an indication that the base tax rates aren't correctly-sized versus societal needs and could be deeply simplified. There is indeed a lot of inertia from the "wish it was welfare" feeling giving a lot of reasons for people (and corporations, lol) to claw for keeping many of the tax credits in play because it does save them money in a noticeable way to their bottom line that also makes them feel like they "deserve it" (for "hard work" or other "earned" reasons) and that could be greatly simplified indeed by, I don't know, maybe correctly investing in real welfare projects instead.

dragonwriter 4y ago
> Tax credits are not and cannot ever be actual welfare if they aren’t money in hand. Refundable tax credits are money in hand. (They may be delayed money in hand, but effectively that’s just welfare with eligibility determined with a lag, which is fairly common, though the lag for tax credits is longer than for most other welfare programs.) But the main “welfare-like” tax credit (EITC) is also advanceable (via the W-5 process) as well as refundable, which removes the delayed aspect, too.