How do you feel about refundable tax credits?

I am of the opinon that ALL exemptions and deductions should be eliminated, a set percentage of each person’s income from ALL sources should be deducted, and the IRS abolished. But that’s just me.

@CaptainHarley I agree with most of what you said. I would think the IRS would still need to exist to ensure the taxes were paid, but a much scaled down version as the taxes should be easy to calculate with a flat tax and no exemptions, deductions or loopholes.

I have thought about this long and hard and have concluded that they are both necessary until someone smarter than me comes along and can illustrate a better solution to the working and non-working poor’s struggle to provide food and shelter for their families.

Nixon started the EITC in 1975 as an incentive to get non-working people off of the welfare rolls and to provide additional incentive to the non-working poor to not fall back on to the welfare programs. Low wage earners are still struggling and now more than ever and these tax breaks or incentives do help offset the additional expenses families have raising children. The rate of increases in low wage pay scales and families are just not keeping pace with the rising costs of rent, food clothing and now gasoline.

Anyone got any better ideas?

@Cruiser

Yes… ALL exemptions and deductions should be eliminated, a set percentage of each person’s income from ALL sources should be deducted, and the IRS abolished, and, if we consider it necessary, set a minimum income level below which no one would be taxed at all ( or even a minimum income level below which no one would be allowed to fall ).

@CaptainHarley is what you describe a “fair tax” system? Is the “set percentage” you describe a sliding scale based on income? Do you believe the well off should pay a larger percent in taxes or should the burden be equally split?

@CaptainHarley I hear what you are saying but can’t follow the mechanics of your suggestions as if we did establish a “min lower income level below which no one would be allowed to fall” as you suggest….who pays for these inevitable shortfalls? We come back full circle to a Gov welfare program…“welfare” is an evil” word for many especially the politicians who feel the need to care for the poor and thus are saddle with the responsibility to promote welfare legislation. This was the very dilemma they faced in the late 70’s when the politicians decided to shift the Governments financial welfare burden to the tax rolls. Same cost to the government but now it is a tax incentive! Brilliant move and now the Politicians can proudly champion tax breaks for the working poor and provide incentives for the non-working poor to get off welfare to get tax breaks instead.

Again, I see no easy answer or other way than to cut taxes to the lowest income brackets and even provide additional tax credits. So the net result is these people pay $0.00 in taxes and even get money back from the Gov in tax “credits” but in the end it is Government welfare in Tax clothing. If we don’t do this then these people just won’t work and they fall back on welfare. And if you think about it you either pay for the tax credits and breaks or you pay for them to be on welfare. Damned if you do or damned if you don’t.

I think people a lot smarter than me have thought this through many times over.

@SuperMouse

It’s not really a “fair tax” system, since the percentage taken from everyone’s income, regardless of source, would be the same percentage across the board. The exception would be the ( very low! ) “negative income tax” paid to those who have no other means of support.

@Cruiser

I suppose you could call it ( though I hate this name! ) a “guaranteed annual income.” Groan! [ See comment to SuperMouse above ]

@CaptainHarley So, would this “guaranteed annual income” only go to those who actually worked or to anybody regardless of whether they worked?

@optimisticpessimist

To anyone who could NOT work and who had no other means of assistance.

@CaptainHarley Thanks for the clarification.