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Thread: Opinion column of poverty

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    Banned sandsjames's Avatar
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    Opinion column of poverty

    http://www.cnn.com/2015/05/12/opinio...ica/index.html

    There is a lot in this column that I agree with. Better education, assistance with child care, etc., but the one thing I don't understand is the following:

    Second, we should expand the Earned Income Tax Credit, which provides poorer families greater economic incentive to work hard and earn more. In 2013, the tax credit lifted 6.2 million people out of poverty.
    "Greater economic incentive to work hard and earn more"? Isn't earning more the incentive to work harder?

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    Quote Originally Posted by sandsjames View Post
    http://www.cnn.com/2015/05/12/opinio...ica/index.html

    There is a lot in this column that I agree with. Better education, assistance with child care, etc., but the one thing I don't understand is the following:



    "Greater economic incentive to work hard and earn more"? Isn't earning more the incentive to work harder?
    I read the article and it's anti-free market, the one system that has lifted more people out of poverty and provided more opportunities than any other system in the history of the human race.

    Raise the minimum wage? How can you pop out kids, then look at yourself in the mirror and admit, "all my education and skills are worth no more than the 'minimum' wage, and the ONLY way I'll ever make more is for the government to raise this wage." How sad.

    Expand Earned Income Credit? Hmmmm, don't we have an $18 trillion debt and $500 billion annual deficits, forecasted by the CBO to once again exceed $1 trillion within several years? And the answer is to EXPAND the base of citizens who already pay NOTHING in the form of income taxes, while asking the few who do pay to pay even more? Yeah, that will work!

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    Banned sandsjames's Avatar
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    Quote Originally Posted by FLAPS, USAF (ret) View Post
    I read the article and it's anti-free market, the one system that has lifted more people out of poverty and provided more opportunities than any other system in the history of the human race.

    Raise the minimum wage? How can you pop out kids, then look at yourself in the mirror and admit, "all my education and skills are worth no more than the 'minimum' wage, and the ONLY way I'll ever make more is for the government to raise this wage." How sad.

    Expand Earned Income Credit? Hmmmm, don't we have an $18 trillion debt and $500 billion annual deficits, forecasted by the CBO to once again exceed $1 trillion within several years? And the answer is to EXPAND the base of citizens who already pay NOTHING in the form of income taxes, while asking the few who do pay to pay even more? Yeah, that will work!

    My point was simply this: How is earning more money not an incentive to work harder? Why does a tax credit need to be used as an incentive? Are there that many people out there who don't correlate working harder with more money?

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    From the IRS

    The EITC is a refundable tax credit. This means taxpayers may get money back, even if they have no tax withheld. Nationwide last year, over 27 million eligible individuals and families received more than $63 billion in EITC.

    http://www.irs.gov/uac/Newsroom/Earn...t-Do-I-Qualify
    Sounds like many people who get this tax credit get it for income they didn't earn. I never understood why it is called "earned income."

    Earned by other people?
    All behold that fancy strutting peacock, the bake sale diva...

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    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by sandsjames View Post
    Isn't earning more the incentive to work harder?
    Let's assume it is...then isn't "earning" more even more incentive?

    For the low income...up to a certain level, the more you make the more Earned Income Credit you get....hence, the name, Earned Income Credit. It is also based on the number of children you have.

    For example, for a married couple with 2 children...they "earn" a tax credit of 40% of each dollar of income...up to a maximum income of 13,650 (tax credit of $5460.

    So...for those people...every extra dollar they earn on their job, gets them a total of $1.40....that's .40 more incentive to "work hard and earn more"

    Above that income level, the credit stays the same until you hit $23K+ and then begins phasing out
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    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by Absinthe Anecdote View Post
    Sounds like many people who get this tax credit get it for income they didn't earn. I never understood why it is called "earned income."

    Earned by other people?
    It's because for the very low income...the more they do earn, the more of a credit they get.
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    Quote Originally Posted by Bos Mutus View Post
    Let's assume it is...then isn't "earning" more even more incentive?

    For the low income...up to a certain level, the more you make the more Earned Income Credit you get....hence, the name, Earned Income Credit. It is also based on the number of children you have.

    For example, for a married couple with 2 children...they "earn" a tax credit of 40% of each dollar of income...up to a maximum income of 13,650 (tax credit of $5460.

    So...for those people...every extra dollar they earn on their job, gets them a total of $1.40....that's .40 more incentive to "work hard and earn more"

    Above that income level, the credit stays the same until you hit $23K+ and then begins phasing out
    Right, so it's an incentive to work, to a certain point, then not go any further because it will end up costing money. Or, have more kids.

    I guess my opinion on this comes from a family member who works just enough to get the EIC, then end up getting almost $8k back between that and the child tax credit (though I thought one of those was going away). So almost 40% of what he brings home is the EIC/tax credit. Far more than he's paying in (not paying in anything). He's been doing this as long as I can remember, with no motivation to do anything except ensure he has children under a certain age at all times.

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    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by sandsjames View Post
    Right, so it's an incentive to work, to a certain point, then not go any further because it will end up costing money. Or, have more kids.
    Yes...up to a certain point.

    I remember getting EIC as a young SSgt...stopped getting it at some point, maybe TSgt, or MSgt. Either way, I don't think it was an incentive to me one way or another...just a nice early year bonus.

    I also don't think anyone says, "oh, I wanna work a few more hours to get more EIC...nor do I think anyone refuses OT or a pay raise because they don't want it to mess up their EIC.

    Mostly...I was just explaining that for a certain group of very low income people, the credit actually goes up the more you earn...I wasn't sure if most people were aware of that...and it is why the it is called an "Earned Income" credit...you have to earn income to get it; the more you earn, the more you get...to a point.

    I guess my opinion on this comes from a family member who works just enough to get the EIC, then end up getting almost $8k back between that and the child tax credit (though I thought one of those was going away). So almost 40% of what he brings home is the EIC/tax credit. Far more than he's paying in (not paying in anything). He's been doing this as long as I can remember, with no motivation to do anything except ensure he has children under a certain age at all times.
    I'm sure he appreciates that EIC...I guess I would be surprised that anyone with that kind of short-term focus gives any thought to EIC as they're going through their year, but just is happy to get it when they file. It's just a lifestyle choice. I'm not saying that we should be supporting it...I just don't think EIC has all the much of an impact on it one way or another.
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    Quote Originally Posted by Bos Mutus View Post
    I'm sure he appreciates that EIC...I guess I would be surprised that anyone with that kind of short-term focus gives any thought to EIC as they're going through their year, but just is happy to get it when they file. It's just a lifestyle choice. I'm not saying that we should be supporting it...I just don't think EIC has all the much of an impact on it one way or another.
    It has a huge impact. His laziness outweighs his pride and the 8k he gets back allows him to live (in addition to other assistance) relatively comfortably (roof over his head, cable, phone, internet, etc). He gives his entire focus to EIC/tax credits. His focus is on that check he gets in February every year.

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    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by sandsjames View Post
    It has a huge impact. His laziness outweighs his pride and the 8k he gets back allows him to live (in addition to other assistance) relatively comfortably (roof over his head, cable, phone, internet, etc). He gives his entire focus to EIC/tax credits. His focus is on that check he gets in February every year.
    Okay...I accept that. I'm sure there are people like this out there.
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