Earned income Credit Fairness

Stravo · Post by **Stravo** » 2004-01-07 06:51pm

I don't know how many of you have done your own income taxes (US) but there is an item that has been there for some time called the Earned Income Credit which essentially gives you some money back if you are the head of household with a child (married or unmarried). The way they determine eligibility is strictly by income and if you make over $80,000 you get nada, zilch. I am not one to begrudge the poorer tax payers a cut of some tax money, especially since another qualifer is that you must support a child (it doesn't have to be a direct child, could be a younger brother, grandchild, etc) but as someone who earns higher than your average welfare mom what's the deal with this cutoff at $80,000 crap?

So once again, the middle class is buttfucked out of yet another small thing that could be helpful. Now, keep in mind I'm not talking about ALOT of money here, I think the maximum you get back is something on the order of $2,500. But why should I be penalized for being successful and working? I have a child who needs clothes, food and an education as much as the poor woman/man living in the inner city. Why should my child be excluded from the credit because her daddy went to grad school and has a good paying job?

In essence it comes down to a revulsion against income bracket aimed programs.

For instance, last year the Earned Income Credit was raised by Bush so that every parent in the country that PAID taxes got an extra $400. People who did not pay taxes because of low incomes or what have you were excluded and there was bitter protest. Let me get this straight, I paid into the system, you got off paying a tax burden because you don't make enough but you're going to begrudge me an extra $400?

I think that all income bracketed credits should be either exapnded or abolished. At least allow the successful middle class folks get a cut. I'm not advocating I should get $2,500 like the poor bastard that's making $14,000 anually but bump up that upper limit to something more reasonable like $175-200,000 for a single person and $500,000 for married couples.

(Yes I took a quick peak at the possibilties for my tax filing this year.)

Joe · Post by **Joe** » 2004-01-07 07:02pm

The majority of the middle class makes less than $80,000 a year. So, to be fair, it's not the bulk of the middle class is getting shafted out of cash - not that that justifies the fact that they don't get the credit.

For instance, last year the Earned Income Credit was raised by Bush so that every parent in the country that PAID taxes got an extra $400. People who did not pay taxes because of low incomes or what have you were excluded and there was bitter protest. Let me get this straight, I paid into the system, you got off paying a tax burden because you don't make enough but you're going to begrudge me an extra $400?

Even more revolting is the fact that many of the people in question have a negative income tax liability - they get more back than they pay in.

It's going to get a lot worse. I wouldn't be surprised if in 10 or so years half the people in this country have no income tax liability at all.

Stravo · Post by **Stravo** » 2004-01-07 07:05pm

Joe wrote:The majority of the middle class makes less than $80,000 a year. So, to be fair, it's not the bulk of the middle class is getting shafted out of cash - not that that justifies the fact that they don't get the credit.

For instance, last year the Earned Income Credit was raised by Bush so that every parent in the country that PAID taxes got an extra $400. People who did not pay taxes because of low incomes or what have you were excluded and there was bitter protest. Let me get this straight, I paid into the system, you got off paying a tax burden because you don't make enough but you're going to begrudge me an extra $400?
Even more revolting is the fact that many of the people in question have a negative income tax liability - they get more back than they pay in.

It's going to get a lot worse. I wouldn't be surprised if in 10 or so years half the people in this country have no income tax liability at all.

I'm going by my area here in NYC. You can't survive in this city and call yourself middle class without making a little more than the rest of the country unfortunately. Its pathetic that I can buy a home and a car with what I make anywhere else particualrly down south as my brother loves to tease me but here in NYC I'm crammed into a tiny apartment with no car. UGH.

Gil Hamilton · Post by **Gil Hamilton** » 2004-01-07 07:12pm

Let me guess, you've got a 2000 dollar a month broom closet, Stravo?

TrailerParkJawa · Post by **TrailerParkJawa** » 2004-01-07 07:39pm

Stravo wrote: I'm going by my area here in NYC. You can't survive in this city and call yourself middle class without making a little more than the rest of the country unfortunately. Its pathetic that I can buy a home and a car with what I make anywhere else particualrly down south as my brother loves to tease me but here in NYC I'm crammed into a tiny apartment with no car. UGH.

Sing the gospel brother Stravo!

80,000 a year is the beginning of the middle class in my area. Anything less is equal to working class elsewhere.

Im starting a job next week that will pay 50K a year and that will leave me with 800 bucks a month to live on after paying the mortgage.

As for child credits I think it should be limited for the first two kids regardless of income. Of course I think the personal deduction should be like 8 grand instead of the current 4500.

Joe · Post by **Joe** » 2004-01-07 08:06pm

Actually, the standard deduction is $4,750 for the 2003 tax year.

Really wishing I hadn't sold my tax textbook now.

TrailerParkJawa · Post by **TrailerParkJawa** » 2004-01-07 08:15pm

Joe wrote:Actually, the standard deduction is $4,750 for the 2003 tax year.

Really wishing I hadn't sold my tax textbook now.

I did'nt notice it had changed this year since I itemize my deductions.

I too took a peak at my taxes via Turbo Tax. Holy crap! This is the most complicated year yet. I have the following:

1099 Income from working as an independent contractor.
Unemployment Insurance Income.
W-2 Income from temp agencies.
Rental income from my condo.
Around 18K - 20K in deductions.

I will come very close to zero federal and state tax liability this year, but just cut a check for $1250 to Social Security yesterday.

Post by **Ghost Rider** » 2004-01-07 08:16pm

Pretty much...and honestly you don't want to see what they have planned for 2011...wherin most of the Tax relief laws go to the wind.

This year isn't too bad(but for anyone above a certain limit it can suck) ...mostly because EGTRRA. The Tax Bracket for this year has gone down a bit(the highest being the 35%) and child is a bit more, but no I do hear ya that in certain areas...it's unfair because the Standard of Living is so outlandishly high versus the rest of the US the standard doesn't work out.

And standard deduction for this year is

9500 for married filing Joint
4750 for Single
7000 for head of household
4750 for MFS

Itemized is increased to 3% of AGI this year(which helps a bit)...so it's not honestly that bad...and gets a bit better for 2004.

Joe · Post by **Joe** » 2004-01-07 08:24pm

I have a question, Ghost; are you a CPA?

Joe · Post by **Joe** » 2004-01-07 08:27pm

Oh, by the way, the standard deduction for MFJ is still only $7,950, unless I'm missing something.

Stravo · Post by **Stravo** » 2004-01-07 08:32pm

Joe wrote:Oh, by the way, the standard deduction for MFJ is still only $7,950, unless I'm missing something.

I know when I was taking Tax law classes many moons ago one of teh boig debates was the Marriage penalty. Is this an attempt to get rid of it perhaps?

Post by **Ghost Rider** » 2004-01-07 08:34pm

Nope, not a CPA but I work as a consultant(or some such title for an EA)...so my knowledge of the jargon has to be rather large and need to know the yabbering of what and whatnot. Essentially I have to have all the knowledge to work at her office, and recieve clients, etc. My boss is still the end all be all word for what I do.

And they doubled the MFJ(being twice the amount of Single) because JGTRRA(a bill Bush signed in May 2003)...which the first effects take this year(had to take a course because of the numerous 179 effects this plan does for this year).

Joe · Post by **Joe** » 2004-01-07 08:37pm

Stravo wrote:
Joe wrote:Oh, by the way, the standard deduction for MFJ is still only $7,950, unless I'm missing something.
I know when I was taking Tax law classes many moons ago one of teh boig debates was the Marriage penalty. Is this an attempt to get rid of it perhaps?

Unlikely, given that the marriage penalty certainly still exists. It affects primarily couples whose incomes are relatively close to one another. The majority of couples aren't affected by it, fortunately.

Joe · Post by **Joe** » 2004-01-07 08:40pm

Ghost Rider wrote:Nope, not a CPA but I work as a consultant(or some such title for an EA)...so my knowledge of the jargon has to be rather large and need to know the yabbering of what and whatnot. Essentially I have to have all the knowledge to work at her office, and recieve clients, etc. My boss is still the end all be all word for what I do.

And they doubled the MFJ(being twice the amount of Single) because JGTRRA(a bill Bush signed in May 2003)...which the first effects take this year(had to take a course because of the numerous 179 effects this plan does for this year).

Ah. Book must have been outdated.

TrailerParkJawa · Post by **TrailerParkJawa** » 2004-01-07 08:41pm

Have they done anything about AMT? I know in the coming years a bunch "middle-class" folks in my area might trigger AMT simply becuase houses cost so much. That is another annoying program designed to close loop holes for the rich, only to eventually ensare the middle class because nobody thought to index it to inflation.

Post by **Ghost Rider** » 2004-01-07 08:43pm

Joe wrote:
Ghost Rider wrote:Nope, not a CPA but I work as a consultant(or some such title for an EA)...so my knowledge of the jargon has to be rather large and need to know the yabbering of what and whatnot. Essentially I have to have all the knowledge to work at her office, and recieve clients, etc. My boss is still the end all be all word for what I do.

And they doubled the MFJ(being twice the amount of Single) because JGTRRA(a bill Bush signed in May 2003)...which the first effects take this year(had to take a course because of the numerous 179 effects this plan does for this year).
Ah. Book must have been outdated.

Besides with that bit of knowledge I had the feeling of

"Shit, still not married...what they get more?!"

"I get $50, extra?!"

Besides since you're taking course and are on your way to this lovely world...you too will experince the joys of"Something new, every year.....and usually makes less sense then the last."

Post by **Ghost Rider** » 2004-01-07 08:46pm

TrailerParkJawa wrote:Have they done anything about AMT? I know in the coming years a bunch "middle-class" folks in my area might trigger AMT simply becuase houses cost so much. That is another annoying program designed to close loop holes for the rich, only to eventually ensare the middle class because nobody thought to index it to inflation.

A bit but the only problem...only for 2003-2004.

Joe · Post by **Joe** » 2004-01-07 08:48pm

Probably not. I hope you didn't have lots of capital gains last year.

TrailerParkJawa · Post by **TrailerParkJawa** » 2004-01-07 08:56pm

Joe wrote:Probably not. I hope you didn't have lots of capital gains last year.

No, I had almost none last year. I wont have much in the way of gains for a long time. I don't have enough money for investment outside of a retirement account. Im not terribly good at picking single stocks anyway. I bought 100 shares of Nortel at 1.25 earlier this year and intended to keep it. I sold at like 2.00 and made just a little more than the commision. Had I kept it Id be up almost 400 bucks now.

Post by **LadyTevar** » 2004-01-08 05:23pm

.....................

This is why I go to H&R Block. Yeah, it's pricey, but I get *everything* back. .. and last year I walked out of the office with a check for $800.

Post by **Ghost Rider** » 2004-01-08 07:29pm

LadyTevar wrote:.....................

This is why I go to H&R Block. Yeah, it's pricey, but I get *everything* back. .. and last year I walked out of the office with a check for $800.

Blech...but that's clouded because of personal dealing with clients and such not.

H&R block is good for ease and low level material, but pray the IRS never goes into audit arena, because I've had to retrieve from H&R Block...sometimes I get everything, other times who knows...I call it pot luck.

But unless you can find a decent CPA or EA, it's certainly the quickest way, that I will give ya.

StimNeuro · Post by **StimNeuro** » 2004-01-08 10:47pm

The most fair, and obviously most unrealistic, way of solving all this is to have a flat tax across the board for everyone with no tax breaks for anything. Of course, then people like Ghost would have a harder time finding work.

Post by **Ghost Rider** » 2004-01-09 12:29am

StimNeuro wrote:The most fair, and obviously most unrealistic, way of solving all this is to have a flat tax across the board for everyone with no tax breaks for anything. Of course, then people like Ghost would have a harder time finding work.

No, I still have to do forms for the hundreds who don't get what it means to fill in what blank.

Joe · Post by **Joe** » 2004-01-09 12:41am

Get rid of the income tax (never gonna happen) and there's still gift taxes, estate taxes, and depreciation to deal with anyway, and that's just a few things.

Post by **LadyTevar** » 2004-01-09 05:25pm

Ghost Rider wrote:
StimNeuro wrote:The most fair, and obviously most unrealistic, way of solving all this is to have a flat tax across the board for everyone with no tax breaks for anything. Of course, then people like Ghost would have a harder time finding work.
No, I still have to do forms for the hundreds who don't get what it means to fill in what blank.

Or people like me who are absolutely horrible with math.