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Most Americans don’t do their own taxes. They go to H&R Block or Jackson Hewitt, and if your family makes under $60k you are almost certainly paying no income t
by monero-xmr 3y ago
Most Americans don’t do their own taxes. They go to H&R Block or Jackson Hewitt, and if your family makes under $60k you are almost certainly paying no income taxes and are receiving a refund via the EITC, getting a check back. So people think tax preparers are voodoo priests that do their incantations to get free money because the average person can’t understand the jargon, can’t handle forms, and the whole endeavor is purposefully opaque.
I support free file for most people. I also support radically simplifying the tax code, which would make the Byzantines blush.
- bradley13 3y agoJust a minor comment, but: why does EITC exist? Just a hidden welfare payment? That out if the way, I agree with the earlier comment: why does the government automatically know all your financial details? Where is the privacy? Where is the requirement for a warrant, to access your private information?
- PopAlongKid 3y ago>why does EITC exist? To relieve the regressive payroll tax (FICA) on low-income families.
- loeg 3y agoFICA taxes aren't regressive.
- latency-guy2 3y ago"Regressive" in this context really doesn't mean anything, it's a label that is reached for when politically convenient. So I agree.
- collinmcnulty 3y agoRegressive has a specific meaning regarding taxes. It means that the rate of the tax decreases with income. Whether a tax is regressive or not is a factual question.
- torstenvl 3y agoFICA taxes are, as a matter of inarguable, objective fact, regressive, which is to say that people who make more money pay a lower rate of FICA taxes. This is due to two facts: (a) FICA taxes do not apply to interest or capital gains or other income sources that apply solely to middle class and above; and (b) FICA taxes do not apply to income above ~$160k. Please do not post misinformation.
- loeg 3y agoThe FICA system, of which taxes are one component, also pays out a lower proportion to higher earners. https://www.ssa.gov/oact/cola/bendpoints.html https://www.ssa.gov/oact/cola/bendpoints.html It is incorrect to describe the system as regressive. It's a little weird to lump it all together as FICA taxes, too. Social security is more of a mandatory pension program that caps both contributions and benefits for high earners (in addition to progressively lower benefits for higher earners on the back end). Medicare taxes are straight up progressive -- there is an extra 0.9% tax bracket on higher W-2 income and the 3.8% NIIT investment income tax on stocks.
- PopAlongKid 3y agoThe question was, why doe EITC exist, not is the reason still relevant today (although I'd argue it is). The additional medicare taxex you mention have only existed for about ten years, EITC goes back to the 1960s as I recall.
- loeg 3y agoThe primary historical motivation of the EITC was to "reform" the former AFDC welfare program. There was concern that AFDC was growing too quickly: welfare rolls increased from fewer than 1 million families in 1964, to more than 3 million in 1973. There was also concern that the AFDC program discouraged working. The EITC is structured to incentivize work, even at low wages. Another precipitating motivation was a recession in 1974 (EITC dates to 1975). https://crsreports.congress.gov/product/pdf/R/R44825/8 https://crsreports.congress.gov/product/pdf/R/R44825/8 (PDF)
- deleted 3y ago
- loeg 3y agoI don't think EITC is hidden? It's just a subsidy for families.
- gensym 3y agoI wouldn’t describe it as hidden. It’s a pretty straightforward form of income distribution. Compared to most government programs for the poor, it’s refreshingly simple. If you ever work with poor families to help them navigate the government resources available to them, you develop a strong appreciation for the EITC as opposed to, say, SNAP (food stamps)
- int_19h 3y agoYour income is not considered private information. One can argue whether this is desirable, but there's basically no way to enforce income taxes if the government is not aware of how much people earn.
- 0x457 3y agoHilarious that the government makes some of us think that portion of someone's money returned to that person is a "welfare payment"
- LoganDark 3y ago> if your family makes under $60k you are almost certainly paying no income taxes How is this possible? Where I live, you can expect to pay around 30% of your income as tax almost regardless of how much money you actually make (as long as it's above something like $600 a year).
- alright2565 3y agoPretty easy, assuming 2 kids filing jointly. Standard deduction is $29,200, so effectively only $30k of taxable income. Of that, 23k is taxed at 10%, 7k @ 12%, or $3.14k/10.5% effective. Then $1.6k/kid gets subtracted due to the Child Tax Credit, for a net -$700 in taxes paid. Keep in mind the cost of living in the USA is higher than many other countries. 60k for a family of four is doable in most places, but it is not a life of luxury. edit: the family will also end up paying 7.65%/$4.6k in a separate tax for a mandatory retirement scheme (FICA)
- valicord 3y ago-$70, not -$700, assuming the rest of your numbers are correct
- asadotzler 3y agoYes. If you and your spouse both make minimum wage and not a cent more, and you have two children or more, you can come out about even. How many two child families do you know with both parents earning absolute minimum wage?
- 3y ago