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WEALTH REDISTRIBUTION IS HERE!

WEALTH REDISTRIBUTION IS HERE!

 

(Disclaimer:  I wrote this a couple of year ago and the numbers have changed since then, “but NOT for the better!”)

 

I wonder how many people are aware of how much money a low income person can get from their income tax return this year.

 

As an example. We’ll say a person earns between $12,750 and $21, 800 and is married filing jointly and has 3 dependent children.  That person is truly worthy of some assistance but how much assistance should other taxpayers have to bear for that individual and at what point do we remove the incentive to work?

 

In the example above, the taxpayer can receive $5751 in Earned Income Credit, up to $3000 in Additional Child Tax Credit.  Specifically, at between $12, 750 and $21,800 of income, the taxpayer would have ZERO tax withheld, pay ZERO taxes and yet still receive a Federal Refund of $8751.  THAT’S $8751 THAT COMES ENTIRELY OUT OF THE POCKET OF OTHER TAXPAYERS!

 

On top of this, the low income would qualify the taxpayer for around $300+ per month in Food Stamps as well as Housing Assistance of up to $700 per month and either free or low cost health care through Medicaid.  The kids can also get FREE breakfasts and/or lunches if they are in public schools.  On the lower end, they would also qualify for SSI or up to $300+ per month.

 

I honestly am all for helping low income people who cannot help themselves or who are the victim our recent terrible economy.  But consider the following.  The low income person can literally DOUBLE their income 100% TAX FREE though all of these welfare programs (and YES, the Earned Income Credit IS a welfare program!).  They have ZERO incentive to work harder or for the second spouse to get a job when they can take your tax dollars and my tax dollars instead.

 

I am convinced that most Americans do not really know how much money is being paid out for these welfare programs and thought this information might be of interest.

 

BUT THERE IS ALSO ANOTHER SIDE TO THIS STORY

A couple can have a million dollars in IRA’s and not take any income out of it.  They also own a home worth a half million dollars and they drive two brand new Mercedes.  They are debt free and basicly retired.  They are legal guardians of their three grandchildren.  While most welfare is “means” tested for not only income but for assets as well, the Earned Income Credit is only tested for income.  Therefore, if either or both of these two spouses were to go out and get part time jobs making a total of $12,750 to $21,800 per year, they too would qualify for the maximum earned income credit of $5751 and could get the child tax credit of $3000.  That works out to $8751 to be paid by the taxpayers to someone who is a millionaire.

 

Both of the above scenarios need to be corrected.

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Heritage Income Tax Service, Inc. | 4303 Portsmouth Blvd., Portsmouth, VA 23701
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Heritage Income Tax offers a full range of tax preparation services. Located in Portsmouth, Virginia, we serve the entire Hampton Roads area including the cities of Chesapeake, Virginia Beach, Norfolk, Suffolk, Newport News and Hampton.