President Elect Obama: Stop the Tax Code Lie

January 12, 2009

With the Presidential Inauguration only days away, I want to join a host of other Americans who are calling for President Elect Obama to end the Tax Code Lie once and for all.

Most Americans do not even know of these outrageous lies. Millions of Americans think that they receive big tax refunds, when they do not. Millions of Americans think that everyone pays some tax, when a third of all taxpayers pay no income tax – projected to increase to 44% under President-Elect Obama’s plan. The reason for this disparity in what people believe and what is actually true dates back to the initial passing of the Earned Income Tax Credit in 1975, and its massive expansion in 1990 and 1993.

Touted as one of the top anti-poverty programs in the country, the Earned Income Tax Credit is no more than a massive government welfare and wealth redistribution system – kept on the down-low from most Americans. It is not obvious because it isn’t called “welfare.” It is called a “tax refund.” I hate to tell Congress, but a refund is only a refund up to the amount that someone paid. Anything else, if NOT A REFUND, is welfare. Currently, taxpayers that paid no income tax (zero, zilch, nada) can receive a “refund” of up to $4,825. [Not a typo].

I am not here to argue whether these people need the money or whether or not the poor should be helped or anything related. My issue is simple. The government needs to stop lying to the American public by funneling these massive welfare payments through the tax code. If the welfare is needed, open up the debate on whether or not welfare is needed and stop hiding it in the tax code.

Also, the biggest area of tax fraud – by far – is related to the Earned Income Tax Credit. Approximately 1/3 of all returns containing an earned Income Tax Credit is flawed, resulting in billions of dollars in lost funds to the government (ultimately taxpayers). If someone wants these welfare payments, let them apply for welfare. Most of these people are already on food stamps and receive assistance already. Let the Department of Health & Human Services sort this out and let us actually see from a budgetary standpoint, the true cost of welfare in this country. What is the government hiding here?

President-Elect Obama has promised a vast expansion in refundable tax credits such as the earned income tax credit. Personally, I think it is time we stopped the lie. I am not against people who need help getting help, but I am against lying to Americans to get it done.

Oh….also, President-Elect Obama has promised big tax cuts for the poor. Just as the refunds are not refunds, these tax cuts are not tax cuts. They are welfare. If someone is already paying zero tax, they can’t get a tax cut. If they get more money back, it is because these “welfare” credits have been increased. Period. I do not know how the press lets the government keep getting away with this lie.

One more note, before all you Obama Lovers jump on my back, this lie has been going on during the Ford Era, the Reagan Era, the Bush I Era, the Clinton Era, and the Bush II Era. Obama did not start the lie, but in the essence of “change,” I think it is time he ended the lie.