In the midst of new proposals for a major tax system overhaul, there’s one tax policy almost everyone agrees has been highly effective: the Earned Income Tax Credit. It delivers significant financial relief to working families while providing financial incentive to work. In 2015, the average credit was $3,186 for families with children.
How disappointing, then, to see important working-class tax policy undermined, despite the best of intentions, by federal and state tax collection bureaucracies. In an effort to cut back on fraud, the IRS has delayed returns and both the IRS and the state Department of Revenue are now routinely auditing Schedule C returns — filings from self-employed individuals who are seeking the tax credit.