How do you feel about EIC?

[TheOtherMe]

Feb 10, 2011 21:34:52 GMT -5 DVM gone riding said:

Nice to know my money goes to someone!! Because what they are getting back is about what I pay in-in a year not at tax time. Actually I pay a little more. I think we could solve all of the budget issues by eliminating EITC dumb idea in the first place if you ask me, why should the Fed gov give you money in a lump sum that you never paid into the system.

I totally agree with you.

[mtshastawriter]

When a parent becomes disabled, the parent receives SSDI for them and each child they have until the child turns 18. We get about $1200 for DH and $360 per child. The income the kids receive is not considered part of our AGI.

[Deleted]

Feb 10, 2011 18:43:38 GMT -5 shelby said:

I hear all the time about people having more kids to get more welfare or more EIC or whatever (although I am sure it happens) I cannot believe people would do this. So say you get $7k back in EIC but the new baby cost you $8k. You get extra food stamps or whatever but the baby cost you more than the benefit. Not only that but the time to take care of children is 24/7 so if you look at kids like a meal ticket you are willing to get paid what like 5 cents an hour. Crazy is all I can think if people say having kids gets them more. Because lets be honest if you are doing your job right as a parent it is harder than any fulltime job that most defiately will pay more than 5 cents an hour.

I find it hard to believe that someone would want to have kids for the EIC; I mean while it is a nice income to get (15K for the couple with 4 kids), the time and effort put into raising them costs so much more.

But in the other hand... their combined income is about 34K and they are getting 17K or so from both the Fed's and the State. 1/3 of their yearly income in one lump sum... and it is tax free.

But I am sure they did not do all that math when deciding to have 4 kids or my other cousin that had her newborn last October (she was a junior in college, so he is an oops baby) and She definitely intends to go back to school.

I guess there is always more than just one side to the story. I don't doubt that some people abuse it, but I am sure some use it as a "step up" and it benefits them. So at the end of the day I do not mind EIC.

[tea4me]

This is a reponse I received from my senator when I emailed him EIC:

"Thank you for contacting me with your concerns about refundable tax credits. I appreciate hearing from you and welcome this opportunity to respond.

While the majority of tax credits are not refundable, credits that are refundable allow a taxpayer to receive the benefits of the credit regardless of the person's tax liability. This allows the lowest income earners who, consequently, have the lowest tax liability to receive the credit. In the example of the Earned Income Tax Credit, a portion of payroll tax paid by lower income taxpayers is returned in order to reduce poverty.

Thank you for taking the time to write me on this issue. Please feel free to do so again on other matters of importance to you. "

Huh?

[schildi]

Feb 11, 2011 17:28:22 GMT -5 @tea4me said:

This is a reponse I received from my senator when I emailed him EIC:

"Thank you for contacting me with your concerns about refundable tax credits. I appreciate hearing from you and welcome this opportunity to respond.

While the majority of tax credits are not refundable, credits that are refundable allow a taxpayer to receive the benefits of the credit regardless of the person's tax liability. This allows the lowest income earners who, consequently, have the lowest tax liability to receive the credit. In the example of the Earned Income Tax Credit, a portion of payroll tax paid by lower income taxpayers is returned in order to reduce poverty.

Thank you for taking the time to write me on this issue. Please feel free to do so again on other matters of importance to you. "

Huh?

What did you expect as the response?

[stats45]

I'll attempt a translation:

"Thank you for contacting me with your concerns about refundable tax credits. I appreciate hearing from you and welcome this opportunity to respond."

Translation: "Tax credits? This email goes directly to one of the wonkish interns. Let's see who does taxes...taxes..."

"While the majority of tax credits are not refundable, credits that are refundable allow a taxpayer to receive the benefits of the credit regardless of the person's tax liability."

Translation: We recognize that it isn't a good idea to make tax credits refundable (able to be claimed by people who don't pay income taxes in net), but this one is. So instead of focusing on this tax credit, think about all the ones that are not refundable. You feel better already, right?

"This allows the lowest income earners who, consequently, have the lowest tax liability to receive the credit. In the example of the Earned Income Tax Credit, a portion of payroll tax paid by lower income taxpayers is returned in order to reduce poverty.

Translation: I admit that it sounds bad that people who pay no net income taxes receive such a large benefit. They pay payroll taxes though. Let's just say that is what they get back. I know that is not true because they still receive Social Security benefits based on their payroll taxes even though I'm saying they have their payroll taxes 'returned'.

"Thank you for taking the time to write me on this issue. Please feel free to do so again on other matters of importance to you. "

Translation: I've got interns and stock answers for thousands of questions. Make my day.

[Deleted]

Feb 11, 2011 18:35:24 GMT -5 stats45 said:

I'll attempt a translation:

"Thank you for contacting me with your concerns about refundable tax credits. I appreciate hearing from you and welcome this opportunity to respond."

Translation: "Tax credits? This email goes directly to one of the wonkish interns. Let's see who does taxes...taxes..."

"While the majority of tax credits are not refundable, credits that are refundable allow a taxpayer to receive the benefits of the credit regardless of the person's tax liability."

Translation: We recognize that it isn't a good idea to make tax credits refundable (able to be claimed by people who don't pay income taxes in net), but this one is. So instead of focusing on this tax credit, think about all the ones that are not refundable. You feel better already, right?

"This allows the lowest income earners who, consequently, have the lowest tax liability to receive the credit. In the example of the Earned Income Tax Credit, a portion of payroll tax paid by lower income taxpayers is returned in order to reduce poverty.

Translation: I admit that it sounds bad that people who pay no net income taxes receive such a large benefit. They pay payroll taxes though. Let's just say that is what they get back. I know that is not true because they still receive Social Security benefits based on their payroll taxes even though I'm saying they have their payroll taxes 'returned'.

"Thank you for taking the time to write me on this issue. Please feel free to do so again on other matters of importance to you. "

Translation: I've got interns and stock answers for thousands of questions. Make my day.

LOL, thanks for the good laugh and so accurate. I am sure that is excatly (or at least close to it) what they were thinking when they replied,

[Deleted]

"cousin 1 and 2 are actually boyfriend and girlfriends. They have 4 kids together and split the kids each year (live together, but never married). "

I'm pretty sure that is illegal and constitutes fraud... You should turn them in.


I do not like the EIC. I am not saying that we should necessarily just cut the funding for this population, i just hate the 'hidden' aspect of the EIC, and the fact that it breeds entitlement... I don't like that 'my money' mentality that goes with it... and the idea i see from so many that THEY don't rely on the government, and then they get thousands in EIC, but somehow that doesn't count... I think, if we are going to help, it should not be quite so much (maybe moderated for COLA) ... fraud should be posecuted, and it should be outright and not hidden.

[Deleted]

No daphne, not at all. I think you did great with it, and that's why i said i didn't necessaily want to stop the assistance (certainly not for everyone, maybe tighten the qualifications)... but the current method of delivery breeds that 'lost it' like it was 'my money' type of thinking, even for those bright people like you who know exactly what it is... that's what i'd like to change, for those people, the delivery system...

[marmar]

I dislike all programs which reward having children.

[jkscott]

What about the people who work their butts off and only make a little more than that with no EIC?

[justwhoever]

Here, in my small town. A shift manager working at one of the few fast food places doesn't even make 20k/yr working full time.

[The Walk of the Penguin Mich]

This thread REALLY bothers me, cawaiu.....

You helped your cousins do their income taxes, which made you privvy to their financial information - which I'm assuming that they did because they trusted you. The fact that you put their whole financial picture on this board seems like it would break any sort of finanical privacy acts, if they exist. I don't know if privacy acts exist for money managers though.

If *I* put my financial information out on a public board for people to read, then that becomes my choice. You've not given them a choice in divulging personal information and this just leaves an incredibly bad taste in my mouth, even though I do understand your frustration on the EITC.

[formerexpat]

The real beneficiaries of this are the industries that get to underpay and then use people on EITC to undercut my wages and possibly yours as well. Don't hate the recipients, they are after all working. Ask questions about why the wages are sub-human.

$8 x 40 x 2 x 52 = $33k a year. Most people can live comfortably on that income in the US.

Some industries are already over paying because some of the people in those jobs aren't even worth minimum wage.

Maybe some people's wages are suppressed because the business has to pay the other guy minimum wage while he's not worth it. Who knows, you could make more if they didn't have to pay this guy a minimum not set by the market.

[Opti]

Most $8/hr jobs are retail and they prefer not to give people 40 hours a week as the managers are deathly afraid of giving anyone overtime.

Its more likely to average out to something like $8 x 35 x 50 = $14K for an individual. Not all places give vacation or holiday pay nor is every adult married with access to two incomes to live on.

Living on $33K in my HCOL area, comfortable is not the word I'd be looking for.

[Gardening Grandma]

$8 x 40 x 2 x 52 = $33k a year. Most people can live comfortably on that income in the US.

Do you really believe that? Are you referring to a single person? Or a family?

[Opti]

Feb 13, 2011 15:27:58 GMT -5 Gardening Grandma said:

$8 x 40 x 2 x 52 = $33k a year. Most people can live comfortably on that income in the US.

Do you really believe that? Are you referring to a single person? Or a family?

I think he's going with married couple to possibly family.

$8hr x 40hrs/wk x 2 people x 52 weeks = $33K

[formerexpat]

Most $8/hr jobs are retail and they prefer not to give people 40 hours a week as the managers are deathly afraid of giving anyone overtime.

Its more likely to average out to something like $8 x 35 x 50 = $14K for an individual. Not all places give vacation or holiday pay nor is every adult married with access to two incomes to live on.

Living on $33K in my HCOL area, comfortable is not the word I'd be looking for.

I regularly scheduled 40 hours for people while a manager in retail. It's not that difficult to count to 40. And 52 weeks is how many weeks I'd expect them to work. I did it for several years until after I finished college.

In fact, that's just one job - work two if you are in that desperate of a situation. I really needed to move out of my house and my girlfriend at the time and I had to save up to do so. I worked 3 different jobs and over 90 hours a week to save up money from June to September. My girlfriend at the time worked 60 at two different jobs. We didn't have children but you do what is necessary for your situation...when the government isn't there to subsidize it for you.

Do you really believe that? Are you referring to a single person? Or a family?

The x2 was for two people, so that would be two people at a minimum but could also be a family. I live in a fairly high COL area [top 30 in the country] and until we bought our home, lived on a gross income not much more than that with some comfortable luxuries.

Right now with the current tax code, if I eliminated our car payments, we could stay in our current >$320k home with all of our other expenses earning just $52k. We could also save 10% of our income under that scenario. My federal refund would be about $2k, which would entirely offset the SS premiums I pay [so I'd get my deferred annuity for free]. My total tax liability would be just $2k, which would essentially be state and medicare taxes. That's a 4% tax rate.

That's with 2 children.

It's not tough to get back down to living on so little. Most people just aren't willing to do it or believe their lifestyle should be something more than they can afford. [/size]

[justwhoever]

At 33k they would still get the EITC. 2595 for 2 kids and 3200 for 3 kids.

[formerexpat]

However, I do not blame the recipients. I blame the beneficiaries, the cheap employers.

Sounds like poor attitude is more of the reason you're passed up rather than lower wages. Wonder how much your corporate loathing shows through in interviews.

Either that or in the last 50 odd years of your life, not having the ambition to set yourself apart from a welfare recipient that is likely years younger than you, with much less experience.

Some people will always have an excuse for their own short comings. Others will look for ways to overcome them.

I sympathize with your unenviable tax position, I really do. My tax bill, not including sales or property, is in excess of the median household income in this country.[/size]

[tea4me]

Feb 13, 2011 14:56:10 GMT -5 The Walk of the Penguin Mich said:

This thread REALLY bothers me, cawaiu.....

You helped your cousins do their income taxes, which made you privvy to their financial information - which I'm assuming that they did because they trusted you. The fact that you put their whole financial picture on this board seems like it would break any sort of finanical privacy acts, if they exist. I don't know if privacy acts exist for money managers though.

If *I* put my financial information out on a public board for people to read, then that becomes my choice. You've not given them a choice in divulging personal information and this just leaves an incredibly bad taste in my mouth, even though I do understand your frustration on the EITC.

Give me a break. It's not like we know their names and social security numbers.

Cawaiu - What are their names and social security numbers??

[Opti]

"I regularly scheduled 40 hours for people while a manager in retail."

That's great your store was OK with that. Under 6 years ago I worked for a major retailer, one of the bigger department stores in the country, and their policy was not to schedule for 40 hours. This was in part because they had a policy for the associate to stay with the customer to complete the sale even if they went past their allotted scheduled time. It was very rare to see anyone scheduled for 39 or 38 hours on a regular basis. Given Walmart's documented tendency to hire mostly PTers I'd guess most large retailers are like what I dealt with and only the smaller retailers that
have fewer open hours are likely to give 40 hour weeks week in and week out.

I'm curious. You said you could live at $52K in HCOL area. Could you do it
for $33K and remain comfortable?

[formerexpat]

I'm curious. You said you could live at $52K in HCOL area. Could you do it for $33K and remain comfortable?

Define comfortable? Obviously, if my break even is $52k [while saving 10%] now, I'd have to cut something to get down to $33k. If you're working for minimum wage, you shouldn't live a comfortable lifestyle. You should be struggling.

The first thing I'd have to do is live in a place that didn't cost >$320k and likely in a home that was in a less desirable school district [one I could find for half the price]. Would I like to do that - no. Could I - yes. My parents bought their home in the "less desirable" school district. I still received a good eduction. In most school districts, the availability for a good education is there...if you want a good education.

My grocery shopping would be done at a discount grocery stores and/or dollar stores. I used to buy most of my things at the dollar store while in college and regularly shopped at discount grocery stores growing up.

At $33k for a family of 4, I'd likely be eligible for free services that I wouldn't be eligible for at $52k, like property tax assistance, for example.

I'd also keep more [or rather get a net refund instead of owe any taxes at all] if I made just $33k, so the net income difference between making $52k and $33k would certainly not be $19k - maybe $10-12kish?

So yeah, I could do it on $33k with just two children.

Your Walmart example is not a good one. Walmart hires a lot of high school kids and elderly people that are specifically looking for PT. Obviously, your statistics are going to be skewed if your pool isn't pure. How many people that want to work full time at Walmart can get full time hours?

The employees that look for full time can get full time. Every retailer that I interviewed with [all major ones] before I left the industry had full time workers and allowed for full time workers. I worked full time so it was one of my questions when I interviewed. This was in 1996 - 2000. We too had to see a customer through a sale; that's fairly standard in the retail industry.

The way you get around the issue is keep an eye on the hours that the full time worker does and put their last 4-5 hour shift of the week [since most FT's in retail work 6/7 days] helping with shipment and/or stocking where their customer interaction would be negligible to non-existent. You get them their 40 hours, get them out with little risk of having them go over 40 hours.

Fortunately, where I managed had a work week that ended on Sunday and shipment came Friday night so I could get my FT's their hours by sticking them in the stock room on the weekend when they ran the risk of too many hours. But, all other retailers have similar tactics at their disposal to avoid having employees going over 40 hours.

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[Opti]

FormerExpat, you said:

"$8 x 40 x 2 x 52 = $33k a year. Most people can live comfortably on that income in the US."

So I thought you would define comfortable and how to get there. Yes if you had children and took advantage of government programs and EIC you could do OK. As a single or a couple in a HCOL area at least by me not so much. Some of the affordable housing for that income is over $1K/mo.

Walmart has been known for steadily dropping the amount of hires that are FT
as a business strategy. Perhaps that has changed? There are at least two documentary films on Walmart with managers and employees discussing the then business practices.

ETA: To me comfortable implies not needing government programs to get by.

[formerexpat]

FormerExpat, you said:

"$8 x 40 x 2 x 52 = $33k a year. Most people can live comfortably on that income in the US."

So I thought you would define comfortable and how to get there.

I didn't know you were trying to connect that post to your question. Most people don't live in the high cost of living areas of the US. If I didn't live in one right now and lived back, say in the suburbs 45-50 minutes outside of Philly where I grew up, yes, we could do it quite easily by using the advice I gave above. I could buy a 3 bd / 2 bath 1k sq ft ranch home on an acre + of land there for about $100k though.

Even still, we could live on $33k now in the Baltimore metro area but compared to what I know and live now, it would not be as comfortable [obviously] but it doesn't mean I couldn't live a reasonable lifestyle on that amount of money.

I think some of what you believe is acceptable / reasonable / affordable is skewed based on the lifestyle you currently live. Your views would be different if you were making $33k. Have you been poor? Like really poor where you had to live in neighborhoods that most wouldn't consider safe? I ask because if you have been poor before then I'm surprised you feel it can't be done and/or have such trouble reconciling the truth behind my statements.

I can find town homes in two of the less desirable school districts in our area in the range of $125k to $150k. At $33k with a family of 4, your net income is going to be >$31k [i.e.<5% taxes]. $31k / 12 = 2.6k per month. Mortgage, insurance & taxes on the $150k home = $900 a month in this area. $900 / $2.6k = 34.4%. These are all 3 bd, 2 bath places.

We'd still have $1.7k / mth left to spend on everything else.

I've lived in neighborhoods much worse than these before in my life. I could live in these neighborhoods again.

My wife may be another story.
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