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Just 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 a
by bradley13 2y ago
Just 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 2y ago>why does EITC exist? To relieve the regressive payroll tax (FICA) on low-income families.
- loeg 2y agoFICA taxes aren't regressive.
- latency-guy2 2y 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 2y 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 2y 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 2y 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 2y 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 2y 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 2y ago[deleted]
- loeg 2y agoI don't think EITC is hidden? It's just a subsidy for families.
- gensym 2y 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 2y 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 2y agoHilarious that the government makes some of us think that portion of someone's money returned to that person is a "welfare payment"