Governor Baker Signs Bill to Expand EIC.

In researching my RIA materials this morning, I learned that MA Governor Charlie Baker signed into law a bill that increased the MA earned income credit from 15% (of the Federal amount) to 23%.

From a bipartisan standpoint, everyone should be surprised that a Republican Governor signed this. And here is why…

First, the IRS website states that 21% to 26% percent of earned income credits are paid in error. That is putting it mildly, as it’s under the caption “Fraud.”

Second, that is an increase in the credit of over 50%.

As a Massachusetts Taxpayer, I am a little surprised to see this. In 2013, $833,000,000 was paid out in the Commonwealth for the earned income credit. By the way, that means that over $5 billion was paid to Massachusetts recipients alone at the Federal level ($833,000,000/15%). Well, with this bill that Massachusetts budget hit will increase to just under $1.3 billion dollars.

If that isn’t sobering enough, how about this: If the IRS themselves state that 26% of earned income credits are fraudulent, $330,000,000 will be paid out fraudulently in the Commonwealth, based upon this increase. Put another way, with a stroke of the pen, the Governor signed into law a bill that just completely and utterly wasted $330,000,000 dollars.

Embarrassing for me to say, but I did not see this coming.

This entry was posted in IRS, MA DOR, News, Tax Collection, Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

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