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This nifty GOP trick will punish the poor and increase the deficit -- at the same time!

Catherine Rampell on

It would impose huge administrative burdens on low-income workers, many of whom cobble together a living through multiple jobs and part-time "gig economy" positions, from which they may not earn enough money to require a 1099.

At a time when Republicans are flogging tax simplification, this would make tax preparation infinitely more complicated. Unless, of course, the goal is to discourage poor people from applying for the EITC in the first place.

Even for those who persisted in applying for the refund, EITC payments might be delayed for many months, causing great hardship. The vast majority of recipients use their refund checks for rent, utilities, mortgage payments and other necessities, as well as to pay down debt.

But the proposal is more than just cruel. It's also likely to cost the government a lot of money.

Recall that Republicans have been steadily cutting the IRS's budget, which is a silly thing to do if you're truly a fiscal conservative who believes in "law and order." The IRS brings in far more money than it's appropriated, particularly in its work going after tax cheats.

And cutting the IRS budget is an especially silly thing to do if you're also giving the agency an enormous new mandate likely to crowd out other enforcement activities -- including those that bring in much bigger paydays.

The amounts at stake in EITC audits are relatively small. Overclaim errors are often just a few hundred dollars, compared with the hundreds of thousands or even millions that can be recovered from deep-pocketed corporations and individuals.

Arguably the IRS already devotes too many resources to these small-potatoes cases; EITC audits represent about 39 percent of all individual income-tax audits, despite accounting for just 7 percent of additional taxes that audits find to be owed.

If Republicans actually cared about reducing EITC tax cheating, there are more effective and compassionate things they could pursue, such as regulating the fly-by-night unlicensed tax preparers responsible for a disproportionate share of EITC fraud.

President Trump said he'd help America win again. He can start by persuading his fellow Republicans to ditch this lose-lose proposition.

(c) 2017, Washington Post Writers Group

 

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