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Today I have heard Pat Buchanan, John McCain, and other republicans ranting about how "Obama is going to tax the wealthiest and give that money to people who do not even pay taxes, and that is socialism."

Apparently republicans are unfamiliar with existing tax code. The United States already uses this tax strategy; it is called the Earned Income Tax Credit. A tax strategy originally proposed by Republican Richard Nixon, the Earned Income Tax Credit was signed into law by Republican Gerald Ford in March 1975. It has historically received broad bipartisan support and been expanded several times, under republican and democratic administrations and legislative bodies.

The Earned Income Tax Credit gives a tax refund to all workers in poverty, who earn less than a certain amount annually--regardless of whether they pay taxes. It was designed to reduce reliance on welfare, and it has been successful.

In short, the EITC basically mandates a minimum annual salary for workers; if you make less than that minimum, you get an earned income credit that raises your salary to that minimum.

Ronald Reagan referred to the EITC as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress." He increased it several times, from 10% at the start of his administration to 14%.

Republican President George HW Bush signed a law that substantially expanded the EITC program; poor people were given additional credit for having more than one child and for providing healthcare for their children; benefits were increased substantially.

And what does John McCain think of the EITC?

From the Washington Post on Saturday:

In fact, in 1999, Mr. McCain opposed efforts to change the earned-income tax credit, which gives payments to the working poor, and called it a "much-needed tax credit for working Americans." And in this campaign, he has proposed to use the tax code to do more such "wealth-spreading."

Here is how the IRS describes the EITC:

The Earned Income Tax Credit (EITC) sometimes called the Earned Income Credit (EIC), is a refundable federal income tax credit for low-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return.

From the Brookings Institute:

Thirty years since ts inception, the Earned Income Tax Credit (EITC) has become a robust and largely successful component of American labor and antipoverty policy.

The Hoover Institute describes it as: "...probably the most cost-effective anti-poverty program the federal government operates."

The idea that Obama is proposing anything revolutionary or extreme in extending tax credits to people who pay no taxes is laughable--such a program has existed for more than 30 years.

Originally posted to CatM on Mon Oct 20, 2008 at 03:28 PM PDT.

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