A rich man beginning to fall is held up
of his friends: but a poor man being down is thrust also away by his friends. The Apocrypha
The poor continue to take advantage of the
rest of us and the Internal Revenue Service and the Bush administration have at last decided to get tough on them. It's because
of the earned-income tax credit, which provides an offset for the Social Security taxes low-income workers have already paid,
along with a credit based on their earnings that is intended to give them an incentive to work. No household with earned income
above $34,692 is eligible for the credit.
In 2001 the IRS began increasing its audits
of the working poor (while at the same time reducing its audits of the wealthy and big companies). In 2002 one out every 64
people who claimed the credit was audited, whereas only one out of 120 persons with income more than $100,000 was audited.
Fifty-five percent of all audits conducted in 2001 were audits of the working poor. In 2001 the average low-income tax credit
paid by the government was $1,976 for households with children. A single poor person whose tax was zero was entitled to $364
as a tax credit. If the poor claim those credits when they are not entitled to them, they are robbing the rest of us. And,
of course, it's not just one or two who are cheating us. It's thousands and so it only makes sense to crack down on them.
To that end, the IRS brought to a close the month that began with April Fool's day by announcing that it was going to tighten
the rules that must be followed by the poor who claim the low-income tax credits.
To help attack the problem and the poor (and
while urging support for his massive tax reduction), President Bush asked Congress for $100 million and 650 new employees
to identify potentially erroneous claims by the poor before any money is paid out. Under the new rules, the IRS is going to
demand that folks claiming the credit produce ahead of time what is described as the most exhaustive proof of eligibility
ever demanded of any class of taxpayers.
People claiming the credit must submit proof
of eligibility months before they claim the credit because, says the IRS, the audits conducted after the credit was claimed
have proved unsuccessful. Beginning in July 2003, 45,000 taxpayers who fit into a "high-error category" will have to submit
proof of their eligibility within six months. Two million will be required to do so in 2004 and eventually up to four million
will be required to submit the evidence. High-error categories include fathers with sole custody of children and grandparents,
aunts and uncles with custody.
Persons in the high-error category will be
required to prove their relationship with the children and that the children have lived with them for six months. Only certain
kinds of evidence to prove the relationship will be acceptable. Marriage certificates may be required, including, in some
cases, certificates for grandparents and great-grandparents. People married in foreign countries may have difficulty obtaining
them within the required six-month period. Even those married in the United States may have difficulty.
In California, it can take up to three years
to get a certificate. Ohio won't issue copies of marriage certificates only abstracts, which are not certified and take six
months to obtain. New York state will not issue certificates to people who were married in New York City and New York City
will not issue the certificates to anyone but the husband and wife "or someone with written authorization from them." In the
case of a New York City resident having custody of a child without parents, the proof may be unattainable. In the case of
common-law marriages, no marriage certificate is available.
Proof of where a child has lived for six
months may also be difficult to obtain, especially for children that are regularly shunted off to different relatives.
Those thinking the foregoing is harsh should
be reminded that the amounts of money that have been lost because of the cheating poor is estimated to be between $6.5 billion
and $10 billion annually and that's a lot of money. In fairness, this must be contrasted with the $132 billion of which the
government is cheated by the non-poor, the $70 billion lost through offshore accounts, the $46 billion evaded by corporations,
and $30 billion evaded by partnership investors.
The difference, of course, is that whereas
those companies and individuals are cheating the government of taxes, they are contributing to the smooth running of our economy
because they are the engines of society. When the wealthy cheat the government by not paying taxes it is exactly the same
as when Mr. Bush cuts taxes for the wealthy. In both cases, by not paying taxes, the wealthy have more money to spend and
they invariably spend it, as Mr. Bush reminds us, in ways that benefit the poor and, indeed, the economy as a whole. Bleeding
hearts should keep this in mind when criticizing the IRS' newest efforts.
Of course the new rules may mean that some
families eligible for the credit will be unable to take advantage of it because of their inability to prove their eligibility,
and as a result some children may go hungry and others end up homeless. That is, of course, too bad, but it is a sacrifice
they should cheerfully make and a price they should gladly pay for the privilege of being part of this great society.
Christopher Brauchli is a Boulder lawyer
and and writes a weekly column for the Knight Ridder news service. He can be reached at firstname.lastname@example.org
2002, The Daily Camera