We Don't Need No Stinkin Tax Cuts!

We don’t need no stinkin tax cuts!
No, we just need to fix the stupid tax code. 2005 is the most recent year for which the IRS publishes statistics but it has certainly gotten worse since then. In 2005 134 million returns were filed for income of $5,137,165,874 ,000. After the adjustments and deductions that we are all familiar with the total tax liability was $990,151,766,000. But wait – there’s more. There’s this thing called tax credits. Now we know about some of these, like foreign tax credits where you get credit for taxes you paid to foreign countries. These are to avoid double taxation you say. Well, in some cases. In others they are government handouts. Some of these giveaways seem to replace the old welfare systems and go to low income taxpayers. Way too many others just go to middle income tax payers. Now I’m all for everyone paying as little tax as possible, but when I was in the work force we all paid our own taxes. To me, taxpayers making $50,000 adjusted gross income (NO, not total income) shouldn’t be getting government giveaways.
What are the “credits” you say? Well, first off you must understand that I’m not talking about deductions that reduce your taxable income. Oh no, these credits are just like a check written to you and in many cases they are exactly that. Child care sounds like a reasonable deduction, and it probably is. BUT, this isn’t a deduction, it’s a credit. That means in effect the government (you and I) are writing a check for the amount of the child care bill. How much? In 2005 it was $3.5 Billion dollars. Yep, Billion with a B. But wait, there’s more. In addition to that credit we have “Child Tax Credit”. That’s just free money for having children. This is in addition to the usual deduction that everyone gets. How much? How about $1000 per child. 26 million returns received $32 billion in free government money. That’s about $1230 per return.
But child tax credit can’t reduce the tax liability below zero. So, some folks couldn’t take all of the free money. What then?? Well, we have – wait for it – “Additional Tax Credit”. That means we just give them the rest in cash. How much? 15 million returns received a bit more than $15billion dollars in free government money. That’s $15,495,160,000.
How about education? Well, 7 million returns picked up another $6Billion dollars there. Remember, we’re not talking deductions, we’re talking free money.
Another cute one is called “Saver’s Credit”. For this one eligible tax payers can put money into savings instead of paying taxes. They don’t have to leave it there, just put it there. In 2005 5 million folks put $950 million dollars there instead of paying taxes.
Now we come to the classic. Officially it’s called “Earned Income Credit” but unofficially it’s “Unearned Income Credit” because it’s the classic free money. This one is so classic that you don’t even need an income, you just have to claim you had one. I heard of a case where an unemployed young lady said she cleaned some houses for about $15k for which she had no records. She of course paid no income tax on this money. After filing her return she got “back” $3500 in free money. This is one of the taxes you can get back without ever paying anything in. For 2005 it was $42,000,000,000.
So what am I trying to say? I’m trying to say that the IRS gave away $92 BILLION in “tax credits” in 2005. How much did the old welfare system cost? Now to me, the IRS should not be in the welfare business. To understand how widespread this practice is consider that 134 million returns were filed in 2005, but only 90 million of those returns paid any taxes at all. I’m not talking about balance due instead of refund returns, I’m talking about NO TAXES period. The problem with our income tax is not the tax rates; it’s the complications like tax credits.
Now you can find statistics somewhere on the net to say anything you want to. Who was it that said “There are three kinds of lies, Lies, Damned Lies, and statistics?” You can undoubtedly find statistics that vary somewhat with those I quote above. However, can you find anything that differs from the general gist of this dissertation?
This is how I see it. What do you think?

Disclaimer, all the above is opinion. Mine.