Bipartisan Proposal to Terminate AEITC

  • Potential 10 Year Savings: $1.1 Billion
  • Sponsor:
  • Legislation:
  • Status: Voted on House Floor

On July 20th, four Democrat Congressmen launched a working group to focus on deficit reduction. Among the savings put forward by the lawmakers was endorsement of a proposal advocated by the Administration to terminate the Advanced Earned Income Tax Credit (AEITC) because it "has a high error rate and is not widely utilized by eligible taxpayers." Under the program, eligible taxpayers may receive a portion of their EITC throughout the year in their paychecks. A government audit revealed that some 80 percent of recipients did not comply with at least one program requirement; 20 percent had invalid Social Security numbers and thus may not have been eligible for the credit; 40 percent failed to file the annual tax return required to reconcile the credit; and of the 60 percent of recipients who did file a return, two-thirds misreported the amount received. As a result, this program is particularly susceptible to waste, fraud, and abuse.

ERIC CANTOR