Another IRS Triumph

The Treasury makes at least $11 billion a year in faulty EITC payments.
Oct. 23, 2013 7:27 p.m. ET While we're talking about incompetent governmentsee the ObamaCare website rolloutthe IRS inspector general reported on Tuesday that from 2003-2012 the feds paid at least $110 billion and as much as $132.6 billion in improper earned-income tax credits. That's at least $11 billion a year, or more than the $9.5 billion Congress will spend on the Department of Commerce this fiscal year. The earned-income tax credit, or EITC, is a major welfare program intended to supplement the incomes of the working poor. It is "refundable," which means you get the credit even if you pay no income tax. In 2011, more than 27 million families received EITC payments of nearly $62 billion.
But here's the catch: The IG report says that in 2011 at least 21% of those payments and as much as 26% were "improper." The percentages in 2012 were 21% and 25%. In other words, at least one of every five dollars, and maybe one in four, of EITC payouts were in some way undeserved. The IG report attributes the erroneous payments to the complicated structure of the EITC and the overall tax code, confusion and turnover among claimants, "unscrupulous tax return preparers" and fraud. The nature and scope of this problem have been known for years, and President Obama issued a 2009 executive order instructing the IRS to reduce the bad payments. But the IG reports that the IRS has made little progress, has not even established reduction targets "as required," and is not in compliance with the executive order. Perhaps the IRS chiefs were too busy monitoring the tax returns of tea-party groups. Our prediction for what will happen as a result of this report: Nothing. Nada. Zip. No one will lose a job, the White House and press corps will ignore it, and in two years the IG will issue another report with the same finding. This EITC fiasco is another reminder that results don't matter for modern liberals. What counts is how much they spend, not whether the right people get the money or if those people ever escape poverty. We are supposed to accept a 21% error rate, and $11 billion in undeserved largesse, as the price of their good intentions.