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Paul Abrams

Paul Abrams

Posted: October 28, 2008 06:38 AM

Reagan the Redistributor: Check Out the Earned Income Tax Credit


The Obama tax program involves increasing by a whopping 4% the tax rate for those whose adjusted gross income is over $250,000, and reducing taxes on everyone else.

Republicans have rightly pointed out that 40% of American households do not pay income tax -- although they more often wrongly just stop at saying that they do not pay taxes, period. From the second, wrong, statement, they assert that giving money to those who do not pay taxes is welfare, socialism and, now, communism.

Actually, these lower income people do pay taxes -- payroll taxes and medicare taxes that are quite significant. Lest anyone become apoplectic that revenues from those taxes are not part of the budget, think again: the social security trust fund has been making up the deficits in the US budget for decades. If it were not for appropriating the surplus in the social security trust fund, even the Republican Congress would have found it difficult to enact its tax cuts.

But even if that were not true, and that the social security trust fund were indeed in a 'lock-box', the Republicans have a bigger problem: the earned income tax credit ("EITC") that was enacted by Gerald Ford and then re-enacted and expanded in 1986 by... could it be, don't tell me, say it ain't so!... Ronald Reagan.

The EITC uses tax revenues (derived from our progressive tax system) to provide additional income to people below certain income levels under a formula so that it gradually phases out as incomes increases. Qualifying families receive a monthly check from the government.

So, Ronald Reagan was a redistributor. That must mean he was a socialist, even a communist.

That's what happens when you pal around with Mikhail Gorbachev.