October 21, 2008 12:32 PM | | Bookmark and Share

When the Earned Income Tax Credit was expanded in the Tax Reform Act of 1986, President Reagan, who signed the bill into law, called the EITC “the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress.”

The EITC provides a tax credit to very low-income working families. The credit can exceed federal income tax liability, meaning that some very low-income families actually receive a check from the IRS. Since pretty much all working people pay federal payroll taxes (and also some federal excise taxes like the gasoline tax) even if they don’t owe income taxes, the EITC seemed like a justifiable break for struggling families.

Leaders of both parties agreed, as did President Reagan. That’s as close to a consensus as anyone finds in Washington. It seemed this was one sort of tax cut that everyone supported.

Until now. Presidential candidate John McCain, who often claims to emulate Ronald Reagan, has lately argued that tax breaks exceeding income tax liability are “welfare,” and has even suggested that they are socialism. While McCain’s views are not entirely clear (since his own health care plan includes a refundable tax credit that would benefit even people without income tax liability) it’s difficult to square his hostility towards Obama’s proposed refundable tax credits with his tributes to the president who supported similar policies.

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