Earned Income Tax Credit
Surprise
JoeUser Forums
It may come as a surprise that I am against the earned income tax credit as I believe from newspaper boy of working paper age to part-time dollar store worker should pay at least a token tax when they meet a threshold of $50 per week and thus subject to withholding, plus social security and Medicare. Many would argue that the IRS cost factor of dealing in petty cash would be prohibitive—to an extent true— but the indoctrination of everyone’s having to share in government costs would help build responsible citizens and remove the scourge of a free ride.
However to be fair to the impoverished, I propose a 5% flat tax subject to withholding up to 15K so that the paper boy—a dependent on a parents’ tax form notwithstanding—who makes at least 200 dollars a month including a mandatory 10% tip estimate—would be subject to withholding along with a special 2% Fica.
Normal part-time or low wage earners whether a zero dependent or not would be subject to the same flat 5% withholding and special Fica but beyond 15K a marginal table of 1% increments per 1K and at 20K the full effect of Medicare and Social Security would kick in. The continuance of the 1% increment would result in a marginal tax withholding at 15% for 25K and 20% for 30K. Under these guidelines, together with the already generous deductions for dependants in determining taxable income make the Earned Income Credit redundant but at the same time not appear as paying no tax at all.
Copyright © 2008 Richard R. Kennedy All rights reserved. Revised: Nov 29, 2008.
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