(CNSNews.com) - House Ways and Means Committee Chairman Bill Archer (R-TX) on Wednesday questioned the wisdom behind President Clinton's proposal to expand the earned income tax credit, (EITC), that's estimated to cost around $21 billion over 10 years.
In a statement from Capitol Hill, Archer said, "Taxpayers might question spending billions more on a program that the IRS says already wastes close to $6.5 billion dollars each year, or about one dollar out of every five, because of fraud and mistakes. And the US Taxpayer Advocate said just last week that, because of its complexity, the administration of the EIC is the third most serious problem facing taxpayers. I think we should be solving problems for taxpayers, not adding to them."
During a speech on Wednesday to the Democratic Leadership Council in Washington, Clinton proposed the earned income tax credit by expanding tax breaks for low-income people. He described the initiative as part of what he called a "new opportunity agenda" that he will unveil in his January 27th State of the Union address to Congress. The EITC has historically enjoyed strong bipartisan support in Congress.
The Earned Income Tax Credit was enacted in 1975 and provides public assistance in the form of an income supplement to low income workers. The EITC is generally delivered to recipients through a government check. The House Ways and Means Committee estimates that for a family with two children in 1999, the EIC check will peak at $3,816 for those with earnings of $12,460 and the credit will completely phase out at $30,580 in adjusted gross income.
The House Ways and Means Committee also said more than 19 million Americans qualified for the EITC in 1999.However, the committee also said that, according to the Internal Revenue Service (IRS), almost $6.5 billion will be wasted in EITC payments for tax year 1999 because of fraud and errors.