My Own Pie

Libertarian Thoughts from Renaissance Guy

Rachel Porcaro’s Story

with 2 comments

     Before discussing the story, I want to first say that I hate the United States tax code and the IRS.  The entire system is unjust and, therefore, evil.  I pay taxes, both directly and indirectly, although I have mostly paid nothing in income tax, since I have generally been in a bracket that pays nothing.  So this is not about my resentment about having to pay income tax.  It is about my conviction that taxing people beyond what is absolutely necessary to carry on minimal government functions is equivalent to theft. 

     Now that I got that off my chest. . .

     A woman name Rachel Porcaro got audited by the IRS.  My heart really goes out to this woman.  She is a single mother of two kids who earns money by cutting hair at a big chain salon.  She makes very little money, so to make ends meet she lives with her parents.  Good for them for taking care of their daughter and their grandchildren!  That’s what family members should do.  Good for Ms Procaro for doing what she can to support herself and her children!  It is not easy.

     I qualify for the Earned Income Credit myself because I have three children and my salary is low enough to qualify.  I would rather not receive it, because I did not earn it.  It is an incentive given to poor people to encourage them to work.  I do not need that incentive, and I do not need to receive money from other people who worked to earn it.  For the first two years, my wife and I did not claim it, but the IRS corrected our tax return and sent it to us anyway.  I always give it to charity, since it does not rightly belong to me.

     What none of the articles about Rachel Porcaro are explaining is that she is, in effect, receiving other income than the meager salary she receives.  Her parents are providing housing at low rent and probably other benefits, too.  In essence she is part of a five-person household that includes her parents, herself, and her two children.  So the income of the household includes the money that her parents earn and the money that she earns, and that amount probably put them over the line of qualifying for the EIC.  At least that is what I’m guessing the IRS’s decision was based on.  (One article I read mentioned the involvement of her father’s accountant, which tells me that he is fairly well off.  I do not know many people with their own accountant, although I have known a couple of accountants.)

     I’m not saying that any of it is fair.  My first paragraph indicates how I feel about the IRS and the tax system in the United States.  However, I am guessing, without knowing the other side of the story, that the IRS treated the benefits that Ms Porcaro receives from her parents as unreported income.  They cannot live together as a family and then base their income on her salary alone–in order to get money that is meant for families that make a lot less.

     It’s easy to feel sympathy for Ms Porcaro when you hear her side of the story.  Even though I think the IRS probably had grounds for auditing her and finding her at fault, I still feel bad about the situation that she is in.  However, feeling bad about an individual situation should not determine policy.  Concluding what is fair and right for everyone should determine policy.

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Written by ambrosianideas

December 12, 2009 at 2:18 pm

Posted in Taxation

2 Responses

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  1. Your argument only makes sense if Ms. Porcaro’s parents were not also filing returns. Think about it for a second. Ms. Procaro files a return, and is taxed based on her income. Her parents file a return and are taxed based on their income. To evaluate Ms. Porcaro’s return on the basis of her income and parents’ already taxed income would be to tax her parents twice.

    Plus, it is more than a little disturbing that the IRS is auditing people below the poverty line at a far higher rate than those making millions a year, especially considering the extremely regressive nature of other taxes the poor pay, such as sales tax and taxes on gas.

    Personal Failure

    December 14, 2009 at 3:38 pm

  2. Yes, but your argument only makes sense if we were talking about how much tax she must pay. We are talking about a tax credit which is over and above what she had to pay (which is $0 at her income level.

    In addition to whatever her parents pay her or her child in real cash, the housing they provide at low cost is also a taxable benefit.

    I agree with you about the IRS. I would abolish it.

    renaissanceguy

    December 15, 2009 at 10:22 am


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