The IRS notice
I referenced in my recent post “The Earned Income Credit and Tax Fraud” included
the following statement (highlight is mine) -
“We estimate 24 to 29 percent of all EITC
claims have some type of mistake which costs
the government $13 billion to $16 billion each year. Some errors are caused
by misinterpreting the law; some are because the preparer accepted
client-provided information at face value and others are out and out fraud.”
Trish McIntire in
her post “Stoning Glass Houses” at OUR TAXING TIMES correctly tells us that we
should not blame the 47% of Americans who pay absolutely no federal income tax
by claiming a combination of the Earned Income Credit, the Child Tax Credit,
the Making Work Pay Credit, and other benefits in the Tax Code.
For the most
part these 47% “tax non-payers” did nothing wrong (obviously there are varying
levels of tax cheats in the 47%, just as there are in the 53% who paid taxes). They merely took full advantage of the many completely
legal tax loopholes available to them.
While I do not
believe the Earned Income Credit, and many other “tax expenditures”, should be
in the Tax Code, I have no problem with claiming them on my clients’ returns if
the client legitimately qualifies.
Let us remember
the famous quote from Judge Learned Hand -
“Anyone may arrange his affairs so that his
taxes shall be as low as possible; he is not bound to choose that pattern which
best pays the treasury. There is not even a patriotic duty to increase one's
taxes. Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone does it,
rich and poor alike and all do right, for nobody owes any public duty to pay
more than the law demands.”
Don’t blame the player, blame the game. Or rather, in this case, those who write the
rules for the game.
If there
is anyone to blame it is the idiots in Congress. Running social programs through the Tax Code
is cheap (although not so cheap when you consider the resulting excessive tax
fraud) and easy. And we all know that
the idiots in Congress will always react by choosing the quickest and easiest
way rather than respond by resorting to actual serious thought.
I expect
the only way to get true tax reform is to replace the current idiots in
Congress with individuals who have intelligence, integrity, and backbone.
TTFN
2 comments:
Thank you Robert. There is no more frustration thing then to list to someone holding court on all "those people" who pay no taxes and know that they didn't pay any on their last return. Sometimes confidentiality stinks.
I am amazed at the number of people who make children merely to gain the earned income tax credit. They do not marry, claim not to live together but have a child every year and claim to be self employed just enought to get the maximum EIC and child tax credits. They also receive food stamps and state paid medical care. Those of us who work and pay taxes are stuck with the bill.
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