The Earned Income Tax Credit Fraud

What, massive fraud in another government entitlement program? Well, the Washington Post is too coy to use the F word. No, that's not fraud, simply "improper payments." We're talking about the Earned Income Tax Credit, whereby a person can earn up to $43,000 per year and get a tax "refund" of up to $5666, depending on number of children (loosely defined).

We know the program is a wonderful one. Just look at this testimonial: "Mark Everson, who served as IRS commissioner under President George W. Bush, called the EITC 'one of the government's most successful anti-poverty programs.'"

The program has been plagued with "improper payments" for years -- decades actually: "The General Accounting Office (GAO) verified the vast scale of the fraud, reporting that '...the IRS estimated [it is] between 27 and 32 percent of EITC dollars claimed.'" And that was during the terror that was the reign of George W. Bush.

Have things gotten better under President Obama? According to an inspector general's report, at least, 21% of EITC payments in 2012 were "improper" ($11.6 billion), by far the highest fraud rate in any government entitlement program.

But in 2010 President Obama signed the Improper Payments Elimination Act, which "requires federal agencies to reduce erroneous payments to a rate of less than 10 percent." Ten percent fraud is surely a modest goal; what private business would be content with such a rate? And how's the IRS doing? In the two years since Obama signed the law, improper EITC payments have increased by 22%.

Oh, but the IRS wants to comply: "The reduction of improper payments is a top priority for the IRS, and we are making progress in this area." Yes, a "top priority." So a 22% increase in improper payments is "making progress." One wonders what the IRS would deem a fail.

The IRS cannot possibly reduce its fraud rate below $11.6 billion, yet a cut of $669 million to the FAA's budget forces the agency to furlough air traffic controllers in order to create 3 to 4 hour lines at airports. Talk about a rigid, inflexible, sclerotic bureaucracy.

Henry Percy is the nom de guerre for a technical writer living in Arizona. He may be reached at saler.50d[at]