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In the tax year 2020, more than 164 million people sent their tax returns to the Internal Revenue Service. They used more than 159 million tax credit claims worth more than $277 billion to lower the amount of taxes they had to pay.
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The tax system shouldn't be used by lawmakers to provide social or economic benefits. Using the tax code to distribute benefits presents a barrier for recipients who lack the income and tax obligation required to qualify for a tax subsidy, in addition to the distortions that targeted tax deductions and credits can lead to.
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Over the past 30 years, lawmakers have turned more and more to the Internal Revenue Service (IRS) instead of traditional government agencies to get social and economic benefits through the tax code. As a result, the IRS now manages 21 refundable and non-refundable tax credits for individuals, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), and about two dozen more tax breaks for corporations, such as the green energy tax credits made possible by the Inflation Reduction Act.
In the tax year 2020, more than 164 million people sent their tax returns to the Internal Revenue Service. They used more than 159 million tax credit claims worth more than $277 billion to lower the amount of taxes they had to pay.
