January 29, 2009 03:35 PM | | Bookmark and Share

Some members of Congress lately are fond of saying that refundable tax credit (credits against tax that can result in the IRS actually sending money to taxpayers instead of taking money from them) amount to “tax cuts for people who don’t pay taxes.” This is intentionally misleading. Essentially all working families pay federal payroll taxes (and excise taxes like the federal gasoline tax and tobacco taxes), but many do not earn enough to owe any federal income tax. Congress and presidents since Jimmy Carter (including President George W. Bush) created or expanded refundable income tax credits, which can result in families of modest income having negative income tax liability.

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