Earned Income Credit: Targeting to the Working Poor (Testimony, 04/04/95,
GAO/T-GGD-95-136).

The earned income credit, which is expected to provide about $22 billion
in tax credits in 1995, is a major federal effort to assist the working
poor.  The credit is intended to offset the impact of Social Security
taxes on low-income workers and to encourage the poor to seek employment
rather than welfare.  GAO testified that a reliable overall measurement
of noncompliance with the earned income credit provisions has not been
made since 1988, but noncompliance appears to be a problem.   The
Internal Revenue Service estimates that 29 percent of the returns that
it examined in January 1994 claimed too much earned income credit and
that about 13 percent of them may have done so intentionally. Although
the credit is intended to help the working poor, the credit's
eligibility criteria do not consider all of the resources that
recipients may have to support themselves and their families.  No one
knows how many illegal aliens receive the earned income credit.  If the
all credit recipients needed valid Social Security numbers for work
purposes, illegal aliens would no longer qualify.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-95-136
     TITLE:  Earned Income Credit: Targeting to the Working Poor
      DATE:  04/04/95
   SUBJECT:  Tax credit
             Illegal aliens
             Eligibility criteria
             Disadvantaged persons
             Income maintenance programs
             Fraud
             Noncompliance
             Tax administration
             Income taxes
             Erroneous payments
IDENTIFIER:  Earned Income Tax Credit
             Tax Compliance Act of 1995
             
------------------------------------------------------------------------

We regret that electronic text of GAO Testimony is not available at 
this time. 

See the GAO FAQ - Section 2.0 for printed copy ordering information.
The FAQ is automatically retrieved with all WAIS search results or 
can be obtained by sending e-mail to: [email protected]