FactCheck: Rand Paul exaggerates scope of tax-credit fraud
Sen. Rand Paul falsely claimed that a tax-credit program for low-income workers has a fraud rate of 25 percent and costs taxpayers $20 billion to $30 billion. Paul cited a report by the Government Accountability Office, but thats not what the report said.
The earned income tax-credit program had an improper payment error rate of 24 percent in fiscal year 2013, according to the latest GAO report. The error rate includes fraud, but also represents mistakes made by taxpayers when filing tax forms and the IRS when processing payments. The GAO blamed the mistakes on the complexity of the tax law. The errors cost taxpayers $14.5 billion which is less than half of the high-end estimate provided by Paul.
Paul, a Kentucky Republican who is considering running for president, joined two other potential GOP presidential candidates at aJan. 25 forumsponsored by the conservative Freedom Partners Chamber of Commerce. Sens. Marco Rubio of Florida and Ted Cruz of Texas also attended.
The moderator, Jon Karl of ABC News, asked the senators if they agreed with Rep. Paul Ryans proposal to expand the earned income tax credit and pay for the expansion by eliminating other tax breaks. TheEITC is a refundable tax credit, which means that low-income taxpayers who have no tax liability can receive a refund. Otherwise, the tax credit is used to reduce a taxpayers liability.
Paul said he opposes Ryans plan and criticized the EITC program for being rife with fraud.
Paul, Jan. 25: When you look at the earned income tax credit, it has about a 25 percent fraud rate. Were looking at $20 billion to $30 billion. And this is from estimates from the GAO[Government Accountability Office], from the government themselves.
Thats not what the GAO said.
The GAO issued areport Dec. 9, 2014, on improper payments made by various government agencies, including the IRS. The GAO said the EITC program had what it labeled an improper payment error rate of 24 percent at a cost of $14.5 billion in fiscal year 2013.
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FactCheck: Rand Paul exaggerates scope of tax-credit fraud