EITC: Good (Takes Money from Congress), or Bad (Hits Underground Economy)?

For several years now, I’ve been volunteering with the VITA program. In this program, the IRS trains volunteers like me — folks without any previous tax preparation experience necessarily — to help low-income people file their tax returns. I’ve been doing this because the majority of low-income tax filers qualify for tax refunds. Many people who qualify for the Earned Income Tax Credit (EITC), for instance, fail to claim it because they do not file or they are too confused by the instructions to claim the credit correctly.

My theory has been that by volunteering, I’ve been helping to siphon money out of the hands of Congresscritters and into the hands of people who can spend it more responsibly. But I’ve been nagged by the worry that by doing this, I’ve been playing too close to the machine for comfort.

Now comes another reason to worry:

The Earned Income Tax Credit (EITC) provides financial assistance to low-income workers through a refundable tax credit. The EITC, which has received strong bipartisan support , now represents the nation’s largest anti-poverty program for non-elderly individuals. In this Note, I contend that the EITC’s historical development failed to account for (and prior scholarly analysis of its impact on labor supply decisions have ignored) the important role of informal employment in the lives of the working poor. This Note presents the first analysis of the financial impact of government transfer and tax programs on the decision to report informal income — income that, were it reported, would be otherwise legal. As the Note’s analysis reveals, while drastic changes in both tax and transfer programs may be necessary to provide financial incentives for many households with children to report informal income, more targeted changes to the EITC could provide strong incentives for childless informal workers to report. The Note argues that the benefits to both individuals and society, financial and otherwise, of tax reporting by low-income individuals engaged in informal work merits reconsideration of the EITC’s overall structure and administration. Administrative and policy innovations described in the Note are also necessary to maximize reporting compliance.

If people become motivated to leave the underground economy for the tax-aware economy in pursuit of a refundable tax credit, which is probably already the case, this may outweigh the benefits of removing money from immediate and direct government control. I’m torn. It’s hard to quantify the cost/benefit here. What do you think?

POLL: If you were me, would you continue to work with the IRS to help poor people file their tax returns and apply for EITC and other refunds?

You bet. Anything that results in money coming out of the government instead of going into it is okay by me.

No way. The EITC is a government buy-off of the poor through an immoral wealth-transfer program, and I wouldn’t be complicit in it.

Heck no. Helping people file their tax returns is just one more way of being a cog in the machine.

Nuh-uh. Refunds are the government’s way of pretending to be beneficial. VITA volunteers are the “good cop” to the auditors “bad cop.”

(View Result)

Anthony Benezet is one of the giants of 18th century American Quakerism, particularly well-known for his efforts towards the abolition of slavery.

He was one of the signers of the “epistle of tender love and caution” that can be considered the founding document of American war tax resistance.

I’ve tried to find some additional information about Benezet’s attitudes toward tax resistance, but have so far only been able to find a fragmentary record that hints at more extensive writings that either no longer exist or that I haven’t managed to locate yet. I found some good information in George S. Brookes’s Friend Anthony Benezet ().

From a letter to John Smith, :

Some time last week we understood a meeting was proposed by William Brown and John Churchman [two other “epistle” signers] to be held with all those who had refused to pay the Last Year’s Tax, to which we understood our English Friends intended to attend; as this proposal begat some uneasiness in some of us O.J. [“Very likely Owen Jones” — George S. Brookes] and myself went up to William Brown and told the Friends there that we must declare our disunity with said meeting, and on our own and the behalf of many of our Friends who we were assured could not approve of it as it will have a tendency to prejudice the mind of many young people and induce them to come to hasty conclusions. Howsoever we were told the time was too short to contradict the meeting, which was held. Where after a pretty deal of conversation it was concluded that the matter was now grown to such a height as to make it necessary to carry it to the Yearly Meeting. The only matter in debate seemed how it should be introduced there, which I understand to be concluded to be done by the channel of the Meeting of Suffering, and as the matter will be probably debated at that Meeting next Fifth day, thought it necessary to acquaint ffd. of Burlington of it. I hope they will with me think it their duty to attend. We are also to have a Meeting of Suffering next Seventh day morning, before the meeting of ministers. I need not expatiate on the matter as it speaks for itself: but remain in great haste as the boat is just going.

Another letter, to James Pemberton (), doesn’t touch on tax resistance directly, but reminds me of John Woolman’s meditations on the relationship between the accumulation of wealth and the promotion of violent means of securing such wealth:

We have professed to be called & redeemed from the spirit of the world, from that prevalent pride & indulgence so contrary to the low, humble, self-denying life of Christ & his immediate followers; but have we indeed been such, has not our conformity to the world, our engagements of life, in order to please ourselves & gain wealth, with little regard to the danger to the better part, been productive to all the evils pointed out in the Gospel, has it not naturally led us & begot a desire in our children to live in conformity to other people; hence the sumptuousness of our dwellings, our equipage, our dress; furniture & the luxury of our tables have become a snare to us & a matter of offence to the thinking part of mankind; and the mind has been raised in our children & often in ourselves from the meekness & self-denial of the Gospel, into resentment in defence of what is become as our Gods; and the meek humble & poor self-denying life of Christ is become of no repute, or rather as a Shepherd was to the Egyptians. The suffering providence which now is displayed over us seems particularly calculated to bring us to our selves, in some respects, as the trials & devastation is greater upon those whose possessions are most expensive, & have been at the greatest pains & expenses in adorning their pleasant pictures. I trust this, at least, will teach us, in future, to live more agreeable to our profession; whereby our wants being made less, the perplexing, dangerous snares & engagements which attend the amassing & use of wealth would be much lessened. If this afflictive providence does induce us to begin anew upon the true foundation of our principles, in that low & humble state of mind & conduct which becomes & indeed constitutes the real followers of Christ, it will have done much for us.

In , French diplomat Gérard de Reyneval, who was stationed in America, reported back to his government on the troubles caused to the revolutionary war effort by Quaker pacifism. He said he had interviewed Benezet and that Benezet “at last declared, yielding to my arguments, that, agreeing with most of the fraternity, he thought that the Quakers ought to submit to the actual government and pay taxes, without questioning the use to which these might be put; but that they had weak brethren among them, whose scruples they were obliged to respect.”

Perhaps so, but I hear tell that there’s a letter co-authored by Benezet and a “B. Mason” under the title “Some Brief remarks offered as Reasons why we ought not to pay Taxes to support War.” Alas, I haven’t yet been able to find a copy of this. (See The Picket Line for for the text of that letter.)

In , Moses Brown wrote to Benezet, saying:

I have to acknowledge the receipt of your several favors… except your thoughts on the payments of taxes for war, which by some mistake I conclude was left out in closing the packet.

As that is a subject much under the consideration of Friends [it] would have been particularly satisfactory to have seen your thoughts upon it.

Inclosed I send a few of mine of that subject on the occasion therein mentioned as they are the first I have communicated to any friend in writing. If there be anything too strongly suggested I shall take it kindly if you’ll note it, as I have a care on me that we do not, in furthering this testimony which I have faith to believe is founded in the truth, do anything to support it in a wrong zeal and not according to knowledge.

As it is a step in the reformation that crosses a received testimony in Society more than perhaps any other, we had need to step wisely in it.

He added a note about Timothy Davis, who wrote A Letter from a Friend to some of his intimate Friends on the subject of paying Taxes, etc. — coming out in favor of paying mixed taxes to the rebel American Congress, and eventually getting disowned by his Quaker Meeting for such opinions.

The want of your thoughts on paying taxes has hitherto prevented my sending Timothy Davis an account of your care and concern for him, hoping they would before long come to hand. I have not seen him for some time but often hear from him; he is doubtless too much in the love of, and conformity to the world, and not enough the meekness and simplicity becoming his profession, as, indeed is the case with too many others.

Our friend Abraham Griffith had a large opportunity with him and his adherents who stand out against the body, please to be referred to him for his state and that of the shattered meeting where he lives. He has been writing against Friends under the character of vindicating of himself, with which I was grieved and sent him word by his and my friend, who had seen his performance, my prospects of such a procedure. He has not fit yet to publish it.

Davis eventually did publish it, in , under the title “An Address to the People called Quakers, concerning the manner in which they treated Timothy Davis, for writing and publishing a Piece on Taxation.” I haven’t seen this leaflet yet, but hope to get a peek at it through interlibrary loan. (See The Picket Line for ) One of these days maybe I’ll have a chance to scavenge through the various Quaker archives back in Pennsylvania. Brown continues:

I have several times felt much for Timothy and longed for his restoration, and though I have several times begun to write to him I have felt a cautious fear, and though when I saw him while under dealing, the way to freedom seemed open between us, yet it is not to write. Perhaps you may not be so restrained. His letter to Abraham upon the subject of taxes shows him to be in the reasoning.

Benezet wrote to George Dillwyn about Moses Brown’s letter (unmatched left-quote in the original):

What I mentioned to Sister Peggy was the desire I had to communicate parts of Moses Brown’s letter relating to the payment of taxes for the purposes of war. This testimony he appears fully convinced is founded on truth, and sends me a copy of a letter he had purposed to send to friends in England on that head, but at the same time he appears very desirous friends should not do anything in a wrong zeal, not according to knowledge more especially as he says it is a step in the reformation that crosses a received testimony in society more than perhaps any other, we had need to step wisely in it. He adds: “It is apprehended the many difficulties friends were under at their first appearance and the manner of the English collecting their taxes, being such that a refusal must have greatly encreased them, the first reformers were excused from that burden, and permitted to pay them, that by so doing they might (as George Fox said in an epistle on the subject in ) better claim their liberty. The trials (he further says) of those who may refuse the payments of taxes will be increased at this time by their conduct being construed into a disaffection to their country; and we hope will be a bar to any’s running in a forward spirit to become reformers without feeling the meek & humbling evidence of truth.

Another letter to Benezet from Moses Brown, dated , touches on Timothy Davis again:

Having had a concern for some time for Timothy Davis I took an opportunity with our friend John Lloyd and paid him a visit, and while there introduced your concern for him and read your observations concerning him and his state, which he seemed to take well, and said they would be of service if attended to, and on the whole I believe Timothy sees he has missed it but can’t get down enough to submit to the cross and acknowledge his mistake whereby he might be reconciled to his brethren. He seems to think friends have been too hard with him, but yet said he thought at times Friends were as near or nearer than ever. He continues to have Meetings by himself and goes some in the neighborhood round and preaches to his adherents. As to taxes, he told us he expected one account that he could not pay, which I have since to mention to others who have paid all, even some who had been on appointment to treat with Timothy.

I think if he could be prevailed on to drop his Meetings at home and not go abroad preaching to others he would very soon apply to be restored, which I mention believing if you attend to your concern on his account it may be useful to him. Your notes on taxes are satisfactory. We having for some time an apology for those who refuse the payment of taxes, our meeting for sufferings have of late appointed a committee to examine it, which has been done, and alterations & additions made, and it has been proposed to send it to your meeting for sufferings for your approbation before it is printed, and I expect it will be forwarded soon after our next Meeting for Sufferings. It is pretty extensive on the subject, containing near 60 quarto pages. Should friends think it suitable at this time to publish it, I have thought it might come in as an appendix although it has been written by one friend, diverse others having assisted in collecting material and suggesting their prospects, it is at present undetermined whether it will be best for one or more to sign it, which occasioned the proposal of sending it to you. The subject is weighty and should be well considered, those friends in our meeting who pay the taxes of whom there are a number of concerned friends and leading members seem to be much more cordially consenting to the publication than could be expected. The principle difficulty with some of them and those of us who decline is we fear some take up the testimony more on account of the authority that demands the taxes than because they are used for war. Such we fear instead of forwarding will eventually retard the testimony, and as some Friends refuse all taxes, even those for civil uses as well as those clear for war and others that are mixed, and thereby dropping our testimony of supporting civil government by readily contributing thereto, it has been a fear whether this variety of conduct won’t mar rather than promote the work. Could we be more united in the ground of our testimony and in our practice in it, I should have more hopes of its speedy obtaining in society. A time will doubtless come when a smaller proportion will be for war than at present when the greater part being for civil uses, friends may pay as there is and ought to be according to the apostle, a conscientiousness in paying to the support of civil government as well as refuse that for war, to refuse the payment of such when even a lesser part be mixed for war before we applied to the authority to separate them would not at present be my place, but probably before that time come when the lesser part will be for war friends may be agreed to ask a separation which, if it should be refused, we might be united in refusing even those the greater part of which may be for civil uses.

I understand some Friends have fallen in with or been overpowered by the common argument that civil government is upheld by the sword, and therefore they decline paying to its support, which appears to me a great weakness, for I see a material distinction between civil government and military, or a state of war, and on this distinction our ancient testimonies was and remain to be supportable of paying tribute & customs for the support of the civil, and yet to refuse to pay trophy money and other expenses solely for war. Civil government is in the restoring & supporting power, yet there is a separation, as of the precious from the vile, in respect of this subject, through the lusts and fallen ages under the specious claim of being the disciples and followers of the Prince of Peace, have greatly contributed to cloud and obscure it.

In , Samuel Allinson began to circulate his “Reasons against War, and paying Taxes for its support.” In , Benezet wrote to Moses Brown and said:

The thoughts on paying taxes of Samuel Allinson is well thought of even by those who yet pay them, and as he has got diverse arguments not in the piece now sent to the clerk of your Meeting for Sufferings, I have suggested to him if Friends with you should agree to the publication of anything, I thought some Friend might, out of them all, make the apology much more complete, which I could wish as done in preference to publishing this now sent.

On , Benezet wrote to Robert Pleasants, saying:

The consistency of paying tax for war is becoming so interesting a subject to the Society that I trust it will be agreeable to you to see some note which we have made on that weighty subject and which by a copy or other I request you will communicate to our dear Friend Edward Stabler with whom we much sympathize in the loss of his dear companion; but cannot write to him as I could wish, I have not even time to read over the copy so that you must help omission we have a care that is furthering this testimony which we have faith to believe is founded on truth not to do any thing to forward or support it in a wrong zeal and not according to knowledge. As it is a step in the reformation that so directly crosses a received testimony in Society more than any other we had need to step carefully and wisely in it. He that believes makes not haste.

And that’s the last word I’ve been able to uncover. Benezet died in . Timothy Davis rejoined the orthodox Meeting in . It seems from these excerpts that a number of war tax resisting Quakers were working to assemble a major argument or statement of doctrine on the subject that could be published by the Society under the imprimatur of their Meeting — probably incorporating Allinson’s work. I haven’t been able to find any drafts of this, though, if any exist.