i keep on saying it and i will keep on saying it because there are lots of injustices in this world, a lot of injustices. for example, let me talk about leaders, telling the real truth. are they afraid of being labeled onto this and onto that. in islam you know we know is very bad for you to say what you don't do. it's very bad. we don't -- we don't allow that. islam does not allow that and therefore we keep on telling people what we should do and what we they should not do. it's important for us to know whenever we have an opportunity because these opportunities to talk to one another to now know what we really want because i believe when you have challenges

facing you, challenges are made to strengthen you. there's nothing you can will disturb you, but if you don't have the challenge, you are not pushed by anything to be better than you are. so i'm talking about nigeria, all -- a new government came in one year, two months back. all the economy problems will disappear, all the problems will disappear, it's not possible. check what is happening and so far they are tackling the main problem of the country which is corruption. people claim -- no. i'm not speaking about that.

but it's everybody's fight. we are totally with the government on this issue. there's no going back. .. not for anybody in any official authority to support. for the last two years we never

haded any, we never had so much amount of money to share within the state of nigeria. every month we have different accounts. now we now share to the other states. last month we had very, very high amounts to share with the states. nobody made a comment about it. when something good happened, nobody cares. if you make one error, the whole world, what is the matter. the whole world is writing on one matter. so i believe it is our own good to support government at all levels. if they are doing wrong, most cases when they do wrong we tell them, say, don't do this, stop. if they do not stop there is nothing you can do about it because they are government.

let's see we can have the governments do justice. we see things happen. now i want to talk about the palestinian issue, palestinian-israeli issue. it is an issue don't talk about but maybe in america or somewhere. because if you see bad thing happening, try to remove it from the way. why is everybody saying what israeli doing to the palestinians of rights? occupied territory by a force. people say it is right. someone had a coup d'etat of a government it is right. justice is something that the must be foundation of all our lives at leader.

if there is no justice, i think kennedy said a threat to justice anywhere is a threat to justice everywhere. if there is injustice somewhere there is injustice everywhere. we must have justice to be the foundation of all leadership. without justice you can't go anywhere. if that is given to who, no matter who the person is. if it is against you or your own pares or brothers or friends, there must be justice. if you're without justice there can't be any good leadership. without good leadership there can't be any society. without society you can't have a good world. i think it is important for us to know that yes, let's not try to go back to those years where people on fighting, of somebody

making a caricature, buying piece of bread and call sitting. then people start shouting, yeah he is enforces islam. you can not fight for god. god is the almighty. there is no weak. why do you have to come out to fight for god? we do not say he is weak. somebody insulted god, so i want to fight, no. who is going to fight for god? some. issues we bring up to discuss, if you as a christian know that i, i as a muslim i take exception to say anything negative word about muslims, don't say it. if you do, you will annoy me and i will get mad about it, so whatever happens you avoid it. so you must respect my religion and respect your own.

what would make me feel bad, please don't do it, when you know i won't like it. i seen so many movies, made in those years. nothing about the prophet muhammad, islam. they know those movies insult islam. nobody stop them. people got killed over that. people called for the boycott of dutch, whatever product, whatever. if you know that what you are going to do will not be accepted by me as your brother, and your neighbor or your colleague, please don't do it. we do the same thing. sometimes they call people

something, we stop that. call them by their names. call him peter or son of this, call him what you wantcall him. don't call him derogatory name. he doesn't like it. i hope people hear what i say. there must be wisdom in what i'm trying to say. that is what you have been doing begging to people we must live together. there is no other option. we can't divide the country into 1100 pieces. that is not solution. when you are united you find your own brothers and sisters, everybody doing what they are supposed to do. getting what they are supposed to get. we are much happy. much more respect for everybody. people must be listened to. leaders must listen to those

they are leading f there problems, listen to them. i've been given five more minutes. >> no, no. >> we have five more minutes before we conclude the program. before i conclude my presentation. >> no, no. >> i'm doing this because they don't is have much questions to ask me. >> all right. >> so i would like to stop here and i would go on and speak another one hour or so. but i also thank you for listening and please feel free to say anything that you feel i have not said right. very free. thank you very much. [applause] >> thank you. thank you so. your emminute-- eminence and

thoughtful remarks and speaking from the heart. we have a few minutes here, what i will do, please, please, work with me, as you see the room is full. each one of you has 30 seconds. >> not one minute? >> one minute, because i know they're going to 45 seconds. you have 30 seconds. please quickly identify yourself, institution, affiliation, ask your question or make your comment. i will take three comments. then we will turn the microphone over to his eminence for a response and another quick round of three more questions. all right. let me start from the back, if that is okay, if you forgive me. start with the gentleman in the back. the lady in front of him. so let's go. 30 seconds, i'm watching you. please use the microphone. >> thank you. my name is aratak, i work at

amnesty international usa. thank you for sharing your thoughts and wisdom with us, your eminence. i have a question, about the crisis, humanitarian crisis linked to the boko haram insurgency but also to other detablizing violence that has hit other parts of nigeria. by some estimates two million people displaced who do not have food, who need humanitarian assistance and there's perception of a lack of an adequate response both from the international community and nigerian government. i would like to know your leadership, your council that you refer to has been working to try to push the nigerian government to take more effective action and doing the same thing during your visit here in the united states. thank you. >> okay. thank you very much for sharing with us. so my question is about girl

child education in nigeria. i appreciate your comment about your dedication to improving and advocateing around girls education. and i also acknowledge the structural issues you pointed out about poverty and the farming life-styles that makes formal education inconvenient. but my question is none of those issues are unique to northern nigeria particularly historically, and i want der if you can talk about other issues that made the north lack significantly behind in terms of girl education when some of the poverty issues are shared amongst some of the other regions? if you could speak a little more what are some of the other issues and how are you addressing them? thanks. >> one more quick one. gentleman right there, please. >> thank you your eminence.

ii want to talk about the conflict in nigeria. what do you recommend what the government does about it and how would you help, thank you? >> one more. >> we'll take one more. >> yes, you. i am giving you -- >> thank you very much. i work with the african immigrant caucus. your highness, you mentioned one of the things that boko haram reacted to the corrupt leadership. my question why, at that particular time, just after the turn of the century because without denigrating nigeria, there has been corruption way before then, why that particular time? thank you. >> thank you very much. the first issue on humanitarian crisis i think i talked about

the idp, which are very qualified. remember during the the president's tenure as president of nigeria we took part in very big, elaborate fund-raising ceremony to raise funds to rebuild the north. a lot of money, in billions were realized. unfortunately, the person made chairman of that fund, everybody knows that. spending billions of his own personal money so he would not steal this money. we were happy he was made chairman of that fund. from that time to now, nothing was done about to relief the suffering these people. of recent we had close to about 1000 or so children died due to the mall knew operation in the camps in the -- malnutrition, in the northeast.

if you see the pictures, it has been terribly bad. we are going to build, we made cloth for them, thousands and thousands of pairs of cloth to wear but the whole thing about malnutrition which must be tackled with a huge amount of funds. i think this in africa, during the last ramadan period, hoped to feed 2 billion to feed people the government must come in fully and take care of this problem. these issues i can't solve because i don't have that funding, i don't have that position to do what i feel like doing. but in my own capacity, with the funds that i have i can reach out to usaid and american

government and anybody with the problem. i came with so many printouts, which some of you can be given, see some of them, with this foundation. we have brought out the true picture of the situation of boko haram in the northeast for people to see. because you are better informed when you see so much things. we are looking to help us to come to our aid and relief suffering of these people. there are hundreds of thousands who are displaced who are in very, very bad shape. let me put it that way. there are over 2 million estimate, more than two million. some are in various homes with families that are well to do. i totally agree and if the government doesn't move fast, in the next couple of months things will really go out of hand. i don't know why children are not going to school because

there are some negative tendencies about school, educating a girl child which we're fighting against, i told you i have the whole reports of the seminar that we organized and i was chairman. what we agreed to do about girl child education. there is poverty, level of the parents and two, that wrong belief that girls should not go to school. some got married at very, very early age, very early age. but getting married doesn't mean you should go to school. there is personal conflict and we have been working on this last six years. i set up a committee. and we met with government and various states and key leaders at that time and report was given, and i personally looked what has been the cause. just recently we opened up that again because there is a new

change of governor ship in states and governors send people to me about two weeks ago to look how we open that case up. stop all the conflict. and nigeria is purely an economic problem. because the pasture for his animals and farmer wants his food growth to come up. so a lot of animals go into the farms, and destroy the farms. if the two people start fighting, whether muslim man or fighting no. no. government must find a way out. government is starting to make moves. president has a document which the minister brought to us as a religious leaders and all the governors of the move to have ranch and whatever across different areas.

to move from mali to niger, to nigeria to everybody like we use do. times has changed. this modern cattle and is, we called for conferences. set up a committee of very highly-placed, leaders to discuss the issues and come up with a paper which we'll now work with the government of nigeria and other stakeholders how we can develop this. we have said, i'm very, very optimistic. it is issue, matter of time trends, you know, to confront these problems. i think that is the pastoral conflict later. you see me later we can discuss more. i see her shaking her head. the boko haram issue my brother brought up why to now?

this boko haram issue started long before. started long before even when he was president. like i have told you -- they are getting followers from all over the country. people believing the young man was saying. and they are coming. when some of them were killed, - nothing was done. they decided to take revenge. that is how the whole problem really started. but, i think you need about one hour plus to talk about boko haram, which i have so much several of the key players on both sides you know. so that is issue about boko haram.

i know why you are saying this because so many people said, boko haram was destablized with the government. wrongly. the same gentleman saw more muslims have been killed by boko haram than christians. was not said in the government. they're killing people in northeast only, mostly. and from what i know northern states a lot of people lost their lives over this not just individuals. okay. do more. >> thank you, minister. let me check. we're over time. so i think what i would like to do, if you will indulge your sister a little bit. here is what i might suggest we do. i know there is one question that i absolutely must take, but what i would like to do is perhaps work with members of your delegation to get these questions to you, email to your

office and see if you can respond and we will continue this dialogue online. for instance here are some of the questions that we have received from people who are not present in this room but who nonetheless would have liked to ask a question of you and to engage you in a discussion. first question is, could you please speak to what you are doing about violence against women and girls and what are you doing to bring the missing girls home? that is one question. a second question we have received is, where would all girl schools be located and when? i believe this is medical school you were talking about. do you know any former or current -- can't read that, leader, oh, the second question. two part question. the second question is, do we

know any former or current leader who has benefited from the boko haram insurgency? >> i don't know. >> thank you. absolutely. >> i know that one already. >> and another question that we have is, what is your view on child marriages and what is being done in this aspect for women empowerment? another question we have received, what is your perspective how to solve escalating violence between herders and farmers particularly in the middle belt. that one i believe was just tackled but these are some of the questions. so i won't put you on the spot right now because i recognize that we at least, we're about 30 minutes over time. >> 30? >> yes. so i'm trying hard not to fet into trouble. with your permission i will work

with your office to try and get some of these questions to you so we can continue this dialogue but there is a one person, who is a former u.s. ambassador to nigeria who had one question i would like for her to ask in question, ambassador sanders. >> i know her. >> i thought you might. >> she told me she would be here. >> thank you, monde, and your eminence, glad to be here with you. what would you do with the combatants of boko haram? that is one of the big challenges, and how do you address them making them feel like they're part of nigeria again? >> with a program of deradicalization the government is working on. and those who have come out, and there are thousands, some were

released by captivity, incarceration by the government or the army. they must have gone through the reconciliation training. this is very difficult just to keep somebody incarcerated for very long time. finally you don't find him guilty of anything and release him, that is not possible. something must be taking place and still taking place and we believe we totally agree with the question and comment on what we should do. this is something that yes we're working on so that before they are released back into civilization after so many years of incarceration, they are well-taken care of and they join the greater communities. it would be better citizens. some of them maybe were wrongly

detained. of course you know being wrongly detained gives you that room to feel about iter about it. you could say what, i wish i was boko haram member. who knows, if you are not treated well, if you are not dealt with properly you can -- maybe they join the boko haram again. now there are less, they are less you powerful than they were before. >> all right. thank you your eminence. i really, really hate to bring the discussion to a close but you have clearly touched on a number of very, very important issues that mean a lot to a lot of people particularly nigeriaians but a lot that work with nigerians in a lot of sectors. thank you for spending the

afternoon with us. [applause] for sharing freely and openly and thought provoking way about many issues on nigeria. your eminence we invite you back to the wilson center next time you are in washington so we can continue this dialogue but i also want to thank all of you for coming. there are clearly a lot of issues that came up during this presentation and i know many of you wanted to ask some questions. so we'll be reaching out to you. if you send us your questions, we'll find a way of working with his delegation to continue the dialogue both online and next time the sultan is in washington. so thank you. thank you very much. i know some of you also want to grab him for a few minutes. >> please feel free to send any question you want. i will answer direct in email. and give you other documents to help you, maybe know more.

i know some people have asked me many more questions. i have five minutes more. >> that was me. >> i would have done more. you but same thing happened to me at harvard. after the presentation, the professor who was there with me said, those who are going -- there was very long line. the room was much bigger than this. so many people. i'm sorry, thank you for, professor for saving me. so thank you too for saving me. >> thank you so much. if you don't mind, very quickly i would like to invite our partners from the iipc as well as our partners from usaid, including stephanie, brendan, and tim, come up here for a quick photo with the sultan. then we will all proceed. please.

please just remain seated a little bit because of security concerns. we have to get this organized. we'll get it done very quickly. we'll be happy to have you. [inaudible conversations]

[inaudible conversations] >> today on c-span2, dr. anthony fauci, head of the centers for disease control, gives an update on efforts to prevent the spread of the zika virus and develop a vaccine. we'll have live coverage from the bipartisan policy center, starting at 11:00 a.m. eastern time. the american enterprise institute host ad discussion about irs programs to assist low income tax-filers. consultants and tax policy analysts looked at ways to improve implementation of the earned income tax credit. this is an hour 1/2.

>> all right. i think we'll begin. good afternoon and welcome to the american enterprise institute. my name is robert doar. i'm the mortgage fellow in poverty studies here at aei. i'm pleased to welcome all of you to today's important discussion how we can improve one of our nation's largest and most effective antipoverty programs. before i get into the meat of the program i want to recognize aei research fellow, angela whose idea it was to tackle issue and asked our presenting author to write the paper we're discussing today. thank you, angela. this is one of a series of public discussions we held here at aei focusing on our nation's efforts to decrease poverty and increase opportunity. we held events on housing homelessness, spending and family issues, schools and deseg

a goings among other topics. we'll tomorrow talk about a new paper authored by aei scholars to focus on which large antipoverty programs discourage marriage among recipients. today's topic, may be when it comes to potential action in washington, the most important facing those of us who work in this area. over the years the earned income tax credit has had strong, bipartisan support because it rewards and encourages work, through refundable tax credits. this support extended to calls for making it larger, but it also has a significant error rate which led many to say we can't expand something that is clearly broken. today's discussion i hope will offer ideas how we can break that logjam by offering ways to improve the operation of this important program. the operation of programs intended to help the poor is a topic close to my heart as i spent 19 years working in state

and city anti-poverty programs in new york and relationship and different approach an culture of the social services programs where i worked and eitc which was administeredded by irs and our state tax department was a topic i observed first-hand, why i am especially looking forward to our discussion today. i have to say, there were annual events when i was commissioner of social services in new york state where we would gather with our colleagues from the irs and state tax department, open vital tax information centers for implementation of eitc tax returns and when we would gather it was a little bit like, you heard the old line, venus and mars coming together, two difficulttures and groups coming working very hard to make a program successful. i think steve will address a little bit of that. to start off we'll hear from steve holt who is author of paper we're publishing today,

the role of irs as social benefits administrator. steve lead as chicago based firm, holt solutions, which provides government services to foundations and non-profit organizations. graduate of harvard law school. he worked in the city of milwaukee. led the milwaukee jobs initiative. he written on tax policy on the state and federal level with focus on earned income tax credits. after steve makes his presentation we'll call up a distinguished panel of respondents who i will introduce then. so, steve, take it away. thanks very much. [applause] >> thanks, robert. the title to this paper, the role of the irs as a social benefits administrator, could be seen as referring to those broad social policy objectives that we expect our tax collector to implement, in other words, tax expenditures. my focus is more narrow.

looking specifically at those aspectses of the tax code what we traditionally think of as benefits, but they are in fact transfer payments. we use the tax administration infrastructure to deliver these to a mechanism called refundable tax credits. in other words, these are credits determined without regard to the taxes that you owe. the oldest and largest of these is the earned income tax credit. i think the as robert alluded to eitc is a remarkable program. it had modest begins in 1975, it has become the one of largest and most successful anti-poverty programs. as robert says, it enjoys broad and bipartisan support. rather than cash assistance it is earnings supplement. you don't get it unless you work. the research evidence is strong that the eitc increases labor force participation and reduces poverty and because it is administered through the tax system it has very little administrative costs and a high participation rate.

but, again as robert said, there are problems with the eitc and i want to talk about for and again, i think speakers are supposed to do three, i will go with four key problems that the eitc has that showcase the challenges that the irs faces in administering social benefits. number one, an administrative identity crisis. as i alluded to the eitc is just one among many policy initiatives the irs must administer under really unexamined and outsider's assumption, hey, it will be easy to do through the tax code. so an agency focused to its core on revenue generation and law enforcement is distributing benefits. challenge number two is the timing mismatch. the premise of the eitc is that there is a gap between what some people can earn in the the labor

market and what it takes to support a family and for most of those affected that gap exists every day but by administering this through the tax code, you get a benefit one time a year in a lump sum. challenge number three is shifted costs because while it is true from the government perspective the irs has very low administrative costs, we have essentially outsourced some of the program management costs to the recipients, rather than going to a publicly funded caseworker, most people who receive the eitc use a paid return preparer. might be a person, return preparation software but the cost of that then takes away from the size of the benefit they receive. but the, the gorilla in the room so to speak, challenge number four, is the compliance problem of the eitc. in the paper i go into great

detail about how the irs polices compliance, both among those who claim it and the tax return preparers who serve as intermediaries and how you calculate what is paid out versus what should be paid out. but given the time available i want to highlight again four key points. number one, almost a quarter of the eitc is deemed to be improperly claimed. number two, the range of behaviors that we lump together as improper really run the gamut. it is from mistakenly interpreting a complex eligibility rule to generously interpreting that rule in your favor, to making it come out right based on how your household is structured to outright disregard of the rules to commit fraud. and that is not unlike other aspects of the tax code. number three, returns with eitc

overclaims disproportionately come from unregulated paid preparers. that relates back to the shifted costs point i made earlier. finally forth, although the eitc overpayments are a fraction of the overall tax gap, they represent a significant amount of money. it is a serious concern and certainly have much higher error rate than you see with traditional benefits programs. given the significant challenges, irs identity crisis, shifted cost, the timing mismatch and problematic compliance, is there someone else better suited than the irs to administer these benefits? perhaps employers. the ieitc is after all an earnings supplement. maybe it makes sense to do this right at the paycheck and that was certainly the premise when we used to have call the advance eitc, enabled people to claim a

portion in each paycheck. but that was little used and problems with it, and since it has been abandoned shows issues with a employer trying to serve as social benefits administrator. there is seldom one-to-one year to year match, a pay period is not what some one is eligible for. little inincident tiff for employers to participate and do it right. all the people who are self-employed. what about a traditional public benefit agencies such as ones who administer housing or food assistance. they tend to be very compliance-focused but what that means in practice they also have much higher administrative costs and lower participation rate. there is also not as much overlap as often supposed between public benefit agency clienteles and eitc population and that is also the case with

another suggested alternative which is are the health insurance marketplaces established under the affordable care act. the only other government agency with a scope and reach similar to the irs is the social security administration. but going through social security would create a whole new set of identity problems. that agency is more about retirement and disability. in other words, non-participation in the labor force. eitc has an essential prowork focus. although eitc recipients claim an earned benefit. it doesn't have the same social insurance perception that social security programs tend to that. in thinking about administrative alternatives to the irs, this gets us to one of the less acknowledgedded reasons that the eitc works so well for recipient and provides value to them and broader society.

what eitc does, that other benefit programs do not, is validate recipient as workers. even more importantly, as rightful, mainstream participants in american society. it is not like i'm poor, is a quote from an eitc recipient that served as title of a book last year studying the credit. it is not like i'm poor, captures the pride and legitimacy that the eitc conveys. fundamental to the pride is the identity of taxpayers. as much as we may complain about or fear or even loathe the tax collector, our common connection as voluntarily compliant customers of irs is an important part of what makes us americans. eitc claimants are no different. housing this transfer payment

somewhere else would engage recipients in a way doing in the tax system does. so there is the bottom line. there is no obvious alternatives to the irs and there is value for the households, for government, and society in housing this benefit in the tax system. at same time the status quo is completely unacceptable. improving the eitc's integrity is essential and will require collective efforts on several fronts. so let's think about solutions in terms of those four key challenges i mentioned identity crisis, timing mismatch, shifted costs and problematic compliance. first, the irs must affirm and in fact embrace its social benefits role and cease to see the eitc as an alien graft, foreign to their one true purpose. similar to what congress dids

forcing irs to refine the mission statement to place more emphasis on customer service, the irs should rework the mission statement again to specifically reference its role as the social benefits administrator. i say to the irs, be true to yourself that you really are. second, we can't continue to ignore that timing mismatch problem. some alternative to the year-end payment of eitc is essential if the full credit achieves its full potential as an economic support. i advocated elsewhere an option that would permit people to draw down half of their eitc during the year in four equal payments. we tested that idea in chicago a couple years ago. it worked and it was very popular with the participants. now there are certainly challenges to designing and implementing periodic payment option for the eitc or range of options and some. structural improvements i will talk about in a minute would go a long way toward helping make

that feasible. the third set of solutions and here the eitc highlights something that needs to be improved with tax administration generally, concerns the role of the commercial return preparation industry. we need to face up with the fact that we have out there a defacto deputized workforce for the irs that however is functioning ad hoc. eitc would not be what it is today without the paid preparer community and all indications are that the irs is going to have to rely on that community more and more for overall tax administration. these private actors are providing a quasi-governmental function and they should be subject to reasonable controls. so congress needs to act quickly to give the irs the power to formalize the role of all papped preparers and insure eitc recipients and all taxpayers are getting high quality assistance from confident and competent,

and trust trustworthy intermediaries. specifically to compliance, this is a broad and complicated problem with multiple solutions. some involve the design of eitc. some involve the mechanics of how the irs operates and some involve leveraging psychology. credit design provides opportunity for improving compliance. for example, the eitc rules governing child eligibility are ininteresting people up with really no social gain. they're very complex. they're often not realistic about how households are structured and they are very difficult for the irs to enforce. the gao report on refundable tax credits that came out last month gave some specific examples of kind of the odd and counterintuitive results that these rules can have. it is time we think outside of the box in developing alternatives because the policy objective is clear. supplementing help for children who are being reared by workers, whose earnings fall short of

supporting themselves and those they care for. in carrying out this policy, if our rules are unrealistic, then non-compliance is inevitable. regarding the mechanics of how the irs operates, we must stop this insane project of budgetarily starving the agency, whether it's to force it to improve or to obliterate it, the irs must have the resources to carry out its assignedded responsiblities effectively and efficiently, otherwise, you well, you get what you pay for. the irs i say needs to be quick on its feet turning away from some of the traditional look back way we do tax administration. taking corrective action overly after returns are processed and

refunds are gone. we need to look at opportunities to look now. and in recent legislation now requires employers to submit their w2 forms by january 31st is a good step in the right direction but i think we need to go further. i advocate following the example of the united kingdom which is moving to real time pay reporting. it takes advantage of the fact we have an extensive payroll processing infrastructure out there that operates digitally. software is being used. we can take advantage of that to be able to find out in real time what people are making. another tool in this regard on the technology front is to set up individual, online taxpayer accounts. this would enable to us consolidate information from multiple sources and also be transparent to taxpayers and enable the correction or supplementing of data as appropriate. the irs also should, so to

speak, seize the day and embrace the big data revolution enthusiastically and intelligently. now, it is not as if the irs is a stranger to big data. in fact, it probably knows more about you in terms of your credit card transactions and even your facebook posts than you would like. the other thing is, there is often this hope that there is out there some silver bullet database that if we could just connect to it, it will tell us conclusively and automatically who should be getting eitc, who qualities as a child. we've established that doesn't exist. what i'm talking about here is a more constructive, directed and i'll say again transparent approach that seizes the opportunity to use data and in service of improved voluntary compliance with the tax code. you may have noticed i really like those words, voluntary compliance. it may seem odd or maybe eni eve in the context of a program that some people say is rife with

fraud but voluntary compliance is a vital social principle and it's a necessary foundation of our tax system. voluntary compliance is rooted d in a essential values of mutual respect, trust and responsibility. and it has a proven track record. in the latest calculations, the voluntary income tax compliance rate sits at 82%. for all of the legitimate concerns about the eitc, the rate among eitc filers is not that far behind at 72%. voluntary compliance is also compellingly practical. imagine an alternative system, a system where essentially what you put on the tax return is proved wrong unless you can prove otherwise. that sounds more like a traditional public benefits program. an irs of the size and scope to be able to implement that type

of system would be completely unaffordable and for most of us would be completely inenoughnerving. we need to build on voluntary compliance and enhance compliance intelligently. eitc and proper payments takes many forms. i think again of a messy spectrum. on one end we have those knowingly non-compliant within a web of complex rules. and on the other end we have people cheating out right or criminal enterprises thwarting the tax system. in between are varying degrees of non-compliance. they stem from variety of things such as laziness, on city men sy, habit or protest or social norms. overlaid are the actions of return preparers, actions that may be known or not known to the tax filer. so for those in this squishy middle part of the spectrum.

this is true, again not only for eitc but for all taxpayers, i firmly believe compliance can be improved with small nudges. that is, readily implementable and affordable prompt that encourage the honest an informed behavior that most taxpayers truly are trying to achieve. tying back to those administrative improvements, think about clues you can glean from big data. maybe business income or expenses that are or are not showing up someplace else. or maybe, indications of where a child is spending a lot of time. clues that can be gently communicates taxpayers, transparently communicated, say through those individual online accounts i talked about. it could be just the right push to move people from non-compliance into compliance. again, remember, it is moving people along a spectrum. and this idea of little reminders that make compliance

salient is equally applicable to the preparer community. irs recognizedded this and we need to encourage them and enable them in their return preparer strategy specific to the eitc. finally some approaches may be intuit lively appealing. i'm thinking of two year and 10-year bans on claiming that have been applicable to the eitc and recently extended to other refundable credits, those in fact can be very problematic. a key point i've been making that the irs functions best as social benefits administrator when it functions best as a tax administrator. singling out refundable credits for special penaltyies simply diverts irs resources that can be more effectively deployed in multifaceted compliance approach as i've been talking about. so when it comes to the challenges the irs faces, in administering social benefits

such as eitc, you know we can continue to muddle through. we can follow a path of least resistance. but most everyone is going to be left then feeling both troubled and dissatisfied. the better course is to affirm the considerable advantages of administering the eitc through the tax code, to be honest about the shortcomings and to work together to address them. so i would look forward to the panel's perspective and hearing from you as well. thanks. [applause] >> okay. we're going to have the panel come up to take their seats and i will introduce them from there. steve, janet, john, alan.

thank you very much, steve. that was a great start. we have a very distinguished panel to respond and to comments on steve's paper. i hope we can have a lively discussion about, again i think a very important issue. so i'm going to give very brief introductions. if there is some aspect of your biography i leave out that you think is important, i urge you to put in there but i want to get right to the presentations. starting one over from steve, with janet mccubbin, director of tax analysis and office of tax policy united states department of treasury. her research focus on tax administration and tax subsidies for low income families. she has 20 years of experience with eitc administration. she worked with aei public

policy insstatute and internal revenue service and public policy institute. after dr. mccubbin, we'll hear from john wancheck where he worked more than two decades on issues related to earned income tax credit. he worked previously as community organizers, public interest advocate in 20 years in connecticut, rhode island, and virginia. we'll hear from alan viard, resident scholar at aei. i was a senior economist at federal reserve bank in dallas and taught economics at ohio state university. he served at united states department of treasury and white house council of economic advisors and joint committee on taxation in congress.

>> green light is on. thank you very much for introduction and opportunity to speak her today. evidenced in the paper steve knows as much or more about intersection between administrative difficulties an policy goals of earned income tax credit. as such the paper is important contribution. about how to evaluate the eitc and improve eitc administration. steve does particularly good job of tradeoffs administering eitc through the tax schism and welfare spending program. and low administrative costs but relatively high noncompliance. as steve points out the eitc is remarkably successful and while we're right to be concerned about eitc errors, we need to keep in mind the extent to which errors are an artifact of conscious policy design decisions and of how we define

errors. where i think more work is needed in the paper, is the development of the details of the policy proposals. as part of the development of the proposals, additional tradeoffs probably need to be taken into account. most important tradeoff that is not mentioned in the paper is that between on one hand, having relatively narrowly targeted benefit that causes taxpayers to run afoul of arguably rigid rules on one hand. and having more relaxed rules that codify what some taxpayers are already doing, but increases cost of the tax expenditure by inducing more claims on the other. in addition to the budgetary costs of some of these proposals. we should think of the social welfare costs of changing the way that we administer the eitc. even some dollars technically paid in error may have some social benefit whereas taxes raised to increase irs enforcement will involve some dead weight loss.

let me offer three examples. first, the paper suggests as others have, that separating the work incentive from the child benefit would improve compliance. if income report something markedly less prone to error than child reporting then having more of the benefit conditioned on earnings and less of the benefit conditioned on having a child could indeed improve compliance. however this would change the targeting of the credit, increase the cost of the credit, or both. in other words, it is generally not possible to have revenue neutral tax simplification without resulting in winners and losers. thus i would like to see a fuller discussion exactly how separating work and child benefits would improve compliance, whose benefits would increase and whose would decrease and what the change in the cost of the credits would be. second, the paper suggests that we would be more flexible in determining who should claim a child, such as by allowing unmarried parents to share in the benefit or allowing anyone who is, the main carrier of the

child to claim the credit as long as no more than a set amount for a child is claimed. i don't disagree with the approach and modifications with the eitc rules enacted in 2001 are good example of how common sense changes can be helpful but i would like to see some acknowledgement, changing tax law to better reflect certain testimonily situations reduces non-compliance it may increase the cost of the credit by bringing in new claimants or may deny the credit to some who are currently eligible. in addition without changes in how we measure and think about errors, i'm not sure that allowing the main person to retain the credit would reduce non-compliance at all. certainly that concept is more intuitive to some taxpayers but if irs and taxpayers have trouble figuring out where a child lives i don't know determining who the main carrier is will be a lot easier. while taxpayers might want flexibility they also benefit

from very clear rules and strikes me as difficult to difficult to define, main carrier. we should think about how families are actually structured and tax policy needs to adapt to certain changing demographics. third, the paper argues that the irs should embrace big data but not too efficiently, unless we tramp on taxpayer rights. use of third party data and other information to deny potentially erroneous e-tc. claims that irs and policymakers seek and struggle with. . .

i think the problem with making use of the data sooner is that the data simply do not exist. it's possible that combination of data could paint a clear portrait of the taxpayer but it would be expensive and time-consuming to create and maintain such a data set. that needs to be weighed against compliance improvement and not just in dollars but in terms of social welfare. finally i want to quibble about one of steve's four themes. he asserts that the irs is in identity crisis over its role as

an administrator of social benefits and they are not service oriented. this is not been my experience. while irs may struggle with balancing service and enforcement and struggles with the lack of resources, the irs devotes an enormous attention to making the tax system work for everyone. they lack the resources and in some cases skill, but does not lack empathy or desire to deliver service. they don't need a new mission statement as much as it needs resources to match the task that has been given. i don't want to leave you with the wrong impression of my critique so let me go back to the beginning and say steve is a voice on the earned income tax credit that i trust the most and i commend his work to everyone who is interested in maintaining and improving this important program. >> thank you very much. john.

>> thank you. i want to agree with much of what janet has said, including how she just wrapped up. i have known steve for quite a long time, and he has academic credentials, but from my perspective he has been in the trenches with organizations that help people file their taxes and claims for the earned income credit and other credits accurately and receive them promptly and freely as possible. some of you may know that steve has written a lot of the history of the earned income credit, which is all tied in with the irs, over the last 30 years or so. he has two papers that are at the brookings website, the earned income credit at age 30, what do we know now?

and that was written around 2006 and captured the timeframe from the enactment of the earned income credit through many changes during the middle part of the 2000 spirit he did another paper, the eit see movement when a number of funders captured when irs changed its perspective to want to help community coalitions build on those tax benefit critics for free to low income filers and also to build up they education around the eligibility rules so people would be able to avoid getting caught into problems with the irs and compliance with the rules of the program. these had been part of the valued history of people who

work in this arena, whether they are valid tear tax preparers or community advocates or paid preparers, and i think this piece that steve has done follows an outline and has a different focus which is very specific around the irs but also about the design of the earned income credit in particular and by extension other child tax benefits. i agree with him that the appropriate focus is on improving the irs administration of the eitc, not searching for an alternative organization to take it over. i want to acknowledge his recognition that cutting the irs

budget which has been done systematically over the past few years and improving compliance, those two things are incompatible. you can't cut the budget and improve compliance at the same time. really what's underneath a lot of that frame of thought is that it inherently leads toward cutting programs like the earned income credit because they claim to be out of control but they're out of control because the irs is starved of the resources necessary to improve compliance. i wanted to build on the main caregiver issue that janet referred to. my understanding is that the national taxpayer advocate is going to be coming forward with the recommendation to congress to move in this direction with

modifications for the american system which is different in many respects than australia and the united kingdom's. one of the concerns, which i think janet alluded to, is whether this would be in to shift compliance concerns back to determining the shares of monetary support that different workers provide a particular child. with that we have gotten away from the ease of program administration and the ease of getting away from people falling into the heirs. i would be wary of circling back

and maybe not improving the ability to verify residency and adding back in complexity about how many thousand dollars did this worker provide for the support of the child's during this year compared to the other person to figure out if there's going to be proportional administration and credit to different workers. i also would note that non- custodial parents that don't live with the child for more than six months, they should not be shut out of tax child benefits in exchange for child care payments, they may waive child benefits to the noncustodial parent. the eitc could not be waived that way either.

there's already a rough split that is possible between parents were divorced or separated, not living together but are attempting to support the same child. i think taking that into account in comparison to what a different style system of proportional eligibility would create, it's important to take a look at those kinds of details when further proposals in this direction come forward. along these lines there are some things that steve didn't mention that fall into some areas that work could be done on now. for example, there have been complaints that in order for the

taxpayer to prove that they have lived with the child for more than six months of the year, the irs may require them to provide certain kinds of documents or suggest certain kinds of documents and people go through trying to pull together documents that actually show that the child lived with them and it turns out to be remarkably difficult to find documents that will effectively do that. the taxpayer advocate have recommended for quite some time that the list of documents, the kinds of documents the irs will accept as going to prove residency the expanded including such things as third-party affidavits that most irs examiners will not accept at this point. there are some things that can be done right away that can be

implemented to help improve compliance and have an opportunity to take a look at where we stand in relationship to very widespread and systemic changes in the programs that kind of require special political moments to incur in congress and presidential administrations so once you open the door to taking a look at re-examining the structure of the earned income credit, you want to do it at the time when it's not also perceived as an opportunity to slash and burn and get budget savings in the process. all of these things are important to take into consideration. i wanted to note a couple quick things, in terms of regulation of paid preparers, it's often

mentioned that paid preparers are a big source of the problem with errors and there's not a distinction made between the chain preparers like h&r block and the actual larger number of individual small preparers or small offices that do an even larger chunk of the earned income credit work. as it turns out, the latter category has an even higher error rate than the chains and many other chains have their own internal training programs because they would prefer to not get caught up with the irs compliance issues. there's no requirement for a minimum competency test for someone to do tax returns. it's kind of remarkable, refunds are are worth a lot of money but

preparers are not required to meet any kind of a standard. unlike the vita program that we heard about earlier where volunteers in the community are required to take an irs sponsored certification test. they can't do returns unless they get a satisfactory grade on that test. in fact, several years ago the finance committee did pass the authority to regulate tax preparers and that got caught up in some political squabbling not related to that issue. it didn't go forward but there was support for it at that time in congress. i think ironically there was not support for it within the irs at that stage of the game, but later in irs commissioner grasped onto the importance of

being able to control that by regulating the workforce that's preparing the returns and launched a regulatory process to be able to require minimum competency standards and ongoing education. in fact that was in operation, there were were about 80000 preparers who took the required competency test before challenges struck down the regulations and it has always seemed symbolic to me that 25% of those 80,000 failed 80000 failed the test. they are still out there folks doing these returns and they are not the only source of air and those preparers are not all permitting fraud. there's no competency standard that they have to meet and we

don't know how much is due to them not understanding the program versus attempting to defraud the government. i think there was an opportunity at the end of last year to get this authority provided to the irs. the finance committee is looking at it again. senators hatch and coates are leaders of that committee and have both indicated they feel this is an important direction to go so we shall see whether it's an opportunity to move in that direction going forward. lastly, to wind up, steve recommends abolishing the two-year penalty that is part of the earned income credit. my view is that will be hard to do in the current political environment. congress actually intensified

the penalties last year adding a 20% accuracy penalty that the eitc folks were previously exempt from because they had the separate two-year and ten-year penalty regime. now there's another penalty added on top of these that might argue for rearranging and getting rid of the two-year penalties but low income filers can't afford to pay this 20% anyway and since they're not getting a refund that they've been deemed ineligible for they don't have resources where you can get 20% of that amount that you didn't actually get what you claimed an error, there's no place to get that and collect that money. the purpose of the penalty is a mechanism to try to prevent repeated claims by the same people who are not eligible for the credit. if you identify them once and

can categorize them as being deliberately negligent and cut them off for a two-year period of time, you're at least not contending with each year, each year, each year the same people trying again and trying to circumvent the limited resources that the irs has. i think i've used up my time. >> thank you john. >> it's a pleasure to discuss this paper that pulls together great information and analysis. my comments will not be as an eitc specialist because i'm not one, but instead a member of the tax policy community who wants to see this function effectively. it's common to think that they have big problems and to look for someone to blame, some people believe the irs is the culprit either in the sense that it should have never been asked to administer the program or in the sense that they're administering the program

poorly. some blame tax for two pairs or individuals and some blame congress. i have several takeaways that builds upon the information that i have about the program. first the problem certainly are substantial but i think they do have to be weighed against the important functions that the eit c performs. there are some reforms that could address and reduce these problems but it's important to not undermine their function when we are making those reforms and we need to recognize the trade-offs involved that if they are to help the people it's meant to help, there will always be some degree of problems as there aren't any other program. the second takeaways that for the most part the irs is not the problem. first it is the right agency to be administering the eit c and is generally doing a good job although some improvements could be made. the third is that although fraud

is committed by some recipients, most noncompliance is of a less severe nature and is due to the complex rules governing the programs. those complex rules are to some extent unavoidable and to some extent reflect policy decisions that should be rethought. unregulated return repairs bear some responsibility. some of them are engaging in fraud and some of them are not competent to prepare eit c returns and others are not held to any responsibility in terms of exercising diligence in helping the recipients comply with the rules. let me offer a few further remarks on these points. i think his case for the irs to continue administering the program is quite compelling. the irs would probably be the best administrator for the program even if we were starting from scratch. he has explained why none of the possible administrators would be better suited or is well-suited as the irs. the case is more clear-cut when

we consider that they have been administrating the program for four decades and think of the disruption involved in trying to throw out what they are doing and bring in a new administrator. it's easy to look at the program with the irs administering and think are the problems. what we don't know of course are the problems that would arise if anyone else was administering the program. i think it's important to realize that the trade-offs and the difficulties in administering this kind of program would still be there even if someone else is administering it and those other administrators would not be as well-equipped to actually handle these issues. there obviously is a problem with giving the irs to many wide wide ranging tasks that are far removed from tax administration. asking the irs to do those other things will divert it from its important function in

traditional tax administration, particularly given the limited resources that congress has been willing to provide the irs. i would mention that the irs has not asked for any of the functions it's been given outside of traditional tax administration, congress has dumped those on to the irs. i think administering the eit c is an odd place to start when addressing the problem. they have two fundamental responsibilities. it has to confirm incomes and confirm family structures. obviously dealing with income really is right up the irs alley. granted the eit c rules do propose an unusual task on the irs per they have to be careful to make sure certain recipients are not overstating their income , that they're not neglecting to claim certain deductions that they should be claiming. i usually that flips on the side of what the irs normally does of worrying about the fact that people are understating their incomes. the irs faces the challenge in addressing that issue but nobody

else to be any better equipped to deal with that unusual function. monitoring family status is something that the irs may not be as well-suited to do is verifying income but in reality, that's also a necessary necessary part of tax administration. any real-world tax system has to realize that it's part of the family and they have to deal with that in the irs is always going to be addressing that in some context. just to briefly offer remark about the overextension of the irs, i think the real overextension lies elsewhere. some have pointed to the fact that the affordable care act asked the irs to administer the original mandate. that does take them further afield to make sure they have those resources. some long-standing functions of the irs are very far from traditional tax of ministration

for have long asked the irs to evaluate nonprofit organizations and monitor their political activity which, as we recently seen has given rise to considerable controversy. so yes there are issues about asking the irs to do too much but i don't think the eit c is part of the problem. the irs is the right agency to be doing that. yes, of course improvements could be made in how that irs administers the program but there's no magic bullet there either. the tendency to blame recipients has led to some misguided measures. we just heard some discussion about section 30 2k, the disallowance for recipients whose claims are denied in some circumstances. i think there is widespread agreement that in current format measure is to punitive and really does reflect a misperception about the source the problem. perhaps a modified version would be suitable for the current

version is to punitive toward some recipients who are really trying to comply. i think the best direction to reform as the other panelists have suggested are simplifying the program rules and heightening the responsibilities for return preparers through regulation. i don't have the time to discuss the role of taxpayers but i think that actually may be the most significant point. simplifying the program rules would clearly be beneficial. another problem here is with the irs. i don't know any aspect of the eitc where they have really made the rules more complicated than what congress has given them. i think instead the irs has tried to simplify as much as it can the complex rule that congress has deemed fit to write into law. i think if there's going to be simplification of the rules, obviously action needs to be taken by congress. there's clearly room where this could be done.

the paper mentioned in passing, the excessive investment rules, they are intended to prevent asset holders with receiving the eit c. the plane is probably not worth the candle. i would mention that when the eit c phases out from the maximum amount you can claim, the phaseout phaseout is based on the larger of their labor income or their adjusted gross income which includes investment income and on other non-labor income. the rules already have a significant provision to keep people with large amount of investment income or other types from getting benefits so the separate investment rules are really another layer of complexity that's probably not necessary. the biggest challenge are the rules on family structure.

who can claim the eit c with respect to what child? i think we've seen from this discussion another discussion that there's not going to be any perfect solution here. indeed the current emphasis on where the child lives does seem like a natural place to have started. we've seen the challenges arise. i do agree with the other comments that trying to measure who is spending more dollars on a child is surely going to be more complicated. what can be done is to consolidate the family and work preferences that now exist into two credits. people across the ideological spectrum have offered proposals to do that. i think as part of that reform there should be a uniform definition of how the tax benefit is assigned among the parents. i don't think the right way, even if you want to have the benefit shared among parents, it's probably not good to have a separate set of rules for each

benefit on which parent can get it and if there consolidated you might not be able to have separate rules but instead the better thing is, if you really think the benefit should be shared is to set out criteria by which the benefit would be partially awarded to one parent and partially to another. we do have to recognize that with today's complex family structures and with family structures that are quite likely not observable by the irs, no rule will be perfect and no rule will lend it self to perfect enforcement. i want to thank steve for very useful and informative paper which i really appreciated reading and having the chance to comment. >> thank you very much alan. i will ask if you have any general comments to what you heard and then i'll have a few more questions. >> to janet's point about the irs, she's absolutely right. the irs cares about this program and they want to do the right thing. i've spent years working at the leadership level and also those

on the front facing part of the irs and there is a service commitment there. but they are a vast agency. if you think about the various cogs, what is it that you decide to do today, things like a mission statement really do matter, to say what are we about here and are we about enforcing and collecting or is there another element. i think there is some benefit. i want to apologize to people that i did not reference this main caregiver concern and this is something that was brought up. it's done in australia in the united kingdom and they've asked what his main caregiver mean and they say well it's the main care. obviously a cultural base concept that we don't have here. so it would take something to translate it. i do think we need to move in some direction that tries to figure how we have rules as well as the flexibility so people can manage this in part of their lives and still be compliant.

>> a couple things i think we didn't hit as explicitly as we should, and i wonder if you could, the percentage of over claim and the dollar amount that represents in relation to the overall cost of the program. could you just state that so the audience can hear it. >> i don't want to get the numbers wrong, but there are two different ways. one is called the over claim rate and that represents returns filed, the attempted claims filed but the payment which we talk about more often is the fact that not everything claimed gets paid. we think about that improper payment rate which i think is at 23.8% in the most recent estimate. that's the dollar amounts what's about $70 billion. it's 23% of $73 billion.

in the realm of social policy, the the programs that we run to help people that are poor are smaller than that. so it's not income sequential. the second question i wanted a little dialogue on is the family structure situation. if the error is about claimants who say they have the child in our house more than six months of the year but didn't, is that right? is that basically what it is? or is there some other way, i guess to some people the rule that you could be a beneficiary if you have the child in your residence more than six months of the year, meaning more than half the year, that doesn't sound that complicated. i've run welfare programs that have complicated rules. that doesn't seem that complicated. what am i missing about the

complexity of that question? >> kids go back and forth a lot. there's some very fluid arrangements. who do you live with at any moment, who are you temporarily absent from, when is your absent not being absent but living with the other, it gets very, very complicated trying to figure that out. so from an enforcer perspective, when you try to say prove it, how do you do that? how do you establish that you live here or there without getting into number of nights here and they are, where it is the go on the pillow for the majority of the night. it just occurred to me and this is a silly question but does up poor family were a child lives in three different places, grandmother, mother and father not eligible to get eit c at all? >> multiple people can be

eligible and you can designate that and that child -- the parent can determine where to go. >> but if the child lives with no one for six months then no one is eligible. >> that's right and that can be a potential problem. if someone is sick and has to leave to take a job or is incarcerated for a short. of time, the time that they live away from the child may be considered a temporary absence and they are still considered living with the child even though technically and physically the child is living with another person for that. of time. sometimes that bridges the gap so you don't have 12 months split three ways. this often raises its head into different ways.

one is that two or three of these individuals each decide to claim the same child, than the irs is going to try to deal with who is the appropriate person and on the other side, sometimes people come to an agreement and say mom should claim the child even though she didn't live with the child for six months. now if the irs elects to audit that person then she may be in a difficult position trying to prove that she met the six month rule. if she doesn't respond to the audit notice, even if she met the six month rule she's going to have problems. >> just discussing this for a few minutes displays the problems.

it is clearly to wrong result in some cases and that would be unjust of those actually occurred but then as john mentioned you're inviting people to work around the rules, the do-it-yourself remedy that will get the credit where it ought to be. it starts off with a simple complex but there are all sorts of wrinkles as you try to implement it. >> i think this discussion has pointed out there is a real continuum in terms of what kinds of errors can occur and we might care more about some types of errors than others. it's difficult for the irs to navigate that. there is not a consensus on what causes errors or what can be done about it. there are some errors that are clearly intentional where parents are sharing custody and they can't figure out who met the over half the year test and

there are some errors that are intentional and many in between and it's not clear how we should think about those. i think drawing out some of those types of situation is another helpful thing that steve does in his paper. coming from the world where i was from, the process by which benefits are awarded or determine that someone is eligible involve a lot of use of what you call big data. there are automated matches against data sources which have to do with someone's employment or income, other sources which the welfare agency due in the united states, prior to determining eligibility. they do it on every case. the case comes in, we send the file to certain locations, if there's a hit we might discover something that needs to be discussed. now it occurs to me is that

there's very little of that automated matching against large data sources on each and every one of the filing of irs tax returns. am i right that? >> not entirely. all returns go through some audit detection filters that involve matching things. some of those data sets are used to deny the credit in map error processing. other pieces of information are merely used to detect returns for examination. some of those returns are selected prior to the refund being paid so in that case it will work very much like a traditional benefit determination program. the issue is that irs only has so many resources certainly does a few hundred thousand, which is actually a lot of those cases

and in some cases because they don't want to hold refunds too long, it ends up auditing the people after-the-fact. the fact. every return goes through data matching but then they skim the top ones that appear to be most problematic. they also do things that steve talked about which i like sending soft notices. cases where there is a difficult claim. irs hates to audit those because one's going to be right in one's going to be wrong and it will be hard to figure out which is which and they will only recover half the money in any case. what they will often do is extend the soft notice and it will say please make sure you're eligible and don't do it again. there's a range of strategies to deal with a range of errors but everyone undergoes some sort of scrutiny. >> i want to ask one more queson becau that's interesting to me. the first one is also part of the irs process.

i think, the claimant files the return early in the tax year, right away, claims child claims child puts the right social security number and name in the form. three fund gets paid because it looks fine and everything is great. subsequently, another return comes in different parents but same child, will that be caught? >> irs won't deny that because it doesn't know that the second person was right or wrong. it doesn't know which one of those claims was correct so will not deny a claim in the case of a duplicate without an examination. i think this points to something that i don't know how other agencies use their data, but the irs won't generally deny a claim unless it's sure, and usually that means conducting an audit that the claim is incorrect.

sometimes it's prohibited from denying claims just because all of these little pieces of data suggest it may not be the right person. while in that case, they are ready paid the refund. the refund is already out the door for that child. right so they may go back and audit that person. they could always do that but they will not deny the claim for the second person because there's no indication that that second claim is incorrect. >> okay, that answers my question so i guess the only other one, that has to do, we didn't discuss it so maybe steve , the timing requirements on paying the refund, they are pretty stringent. >> the irs has 45 days from receiving the return to start paying interest. it's not that it can't hold the return later and work those

cases, it's just that it's slow to do so because of the interest expense and because people are waiting for those refunds and there's a big cultural expectation that we will have our refunds delivered to us timely. i will also say that slowing down payment of the refund does help in the case where you have more definitive data to match to so slowing it down to match the w-2 you make sense to me but if you're slowing it down just you can audit more taxpayers without having some automatic process, all it does is shift the resource cost from one point time to another point time. slowing things down doesn't help as much as you might think although it indicates places where we might be getting the w-2 data sooner. >> this is a very lively discussion. does anybody else wants? we will open it up to questions from the audience.

ray here in the blue shirt. >> i have a question for steve. i was wondering if you would address, i was wondering if you could address former commissioner larry's proposal to have hhs do the initial screening for eligibility. i don't know if you're aware of this proposal in march of this year. >> no i'm not particularly aware of that. i think the challenge with any of that how are they better situated, if there's an assumption that there is significant overlap and people who are coming are also getting something else that an hes administered program already gets, that's one thing but we generally know that's not the case so i think it's difficult. certainly, there is a division

of responsibility under the affordable care act about what hhs is doing and what irs is doing and trying to play to each of their strengths. it's not as if there cannot be a role of that kind of cooperation but i don't really know the depth of that. >> i would say the hhs at the federal level is likely not to have the data on the individuals because these are run at the state levels. a federal ability to do that match would be hard. on the other hand, this overlap question is one worth pursuing. my perception is there is more overlap than some studies have shown. that was the expense we saw new york city. >> you might be interested, the urban institute did a paper commissioned by the irs that looked at the overlap. they found there was not that much overlap. very little between the two but less overlap than you would think between snap families and irs families.

even though there was some overlap between eligibility criteria for irs to be able to use snap data to definitively rule someone in her out. if it's not good enough to definitively rule someone in her out during processing and it's just an indication of who irs should audit, it's not really helping the irs beyond what they're really doing. >> do they do medicaid to? >> no they just looked at snap and hannah. >> okay next question. brown shirt. >> rate for the microphone. that's you. is it brown? i'm sorry. i apologize. >> my son suffered some color deprivation. okay there was a lot of talk about violence your compliance. let's make the assumption that voluntary compliance is

perceived as fairness. the fact that somebody pays or makes a lot more money and pays less than tax, you know the story. could we come at this from a different angle and ask if tax reform and increased minimum wage would mitigate the eit c program on the irs? meaning there would be less people in it if there was a greater perception of fairness in income taxation and also, look, there's no reason why somebody is making 750 an hour and should be able to pay their bills. unfortunately they can't. if we raise the minimum wage, we might mitigate that to. >> just a question. >> i think it's certainly the case in the history of the credit that policy are interrelated. some people see one as an alternative to the other and some people see them as complements. the reality again, at a higher

minimum wage people are still going to be eligible. eligibility goes up. the income scale because we phased the credit out gradually to make sure working more is still worthwhile. i don't see them as clear-cut alternatives, but as joint parts of what we would have with economic policy. >> some have been skeptical of minimum wage as an anti- poverty program because it's not well targeted but it benefits a wide range of workers, some of of whom are supporting themselves and families and others of who may be teenagers from high-end families so obviously some of the benefits a minimum wage are going to people who you probably wouldn't deliberately include in an anti- poverty program. there's also the reality that minimum wage has the potential to cause unemployment which you

would expect as you keep pushing the minimum wage up higher and higher. obviously the effects are more modest that they would be at higher levels but if you think about increasing it by large amounts, you would certainly have to address that issue. most economists, instead instead of saying let's use minimum wage as a substitute they say instead let's use it as a substitute for minimum wage. even if the minimum wage causes only modest amount of unemployment, it would seem to be dominated by the tax credit which helps draw people into the workforce and help them develop skills that really can improve their long-term prospects in life. >> i'm just like to quibble a little bit they the administration supports increasing the minimum wage and also increasing it to parents without children who are receiving the least benefit from the eit sea. in some those of the same people who would be claiming a credit

erroneously. i actually think you raise an interesting point and one that is hard to imagine what it would look like, but maybe think about if we are releasing some of the pressure on these families by increasing the minimum wage, maybe there will be less claiming credits that they are not really entitled to. i think that's a sound initiative. it's interesting to see that has drawn support across the ideological spectrum with president obama and speaker ryan saying we need the support. hopefully noncompliance will not prevent that type of initiative from being adopted. we've seen much of the noncompliance arises from the struggle to determine who should claim each child.

that really shouldn't undermine support for proposal and it's going to people who are childless and were currently receiving very little aid. i think one of the advantages, if we can reduce the reality and the perception, it should increase support for the itc and should make it easier to adopt a spam in the area it's needed. >> i'm glad you raise that. that was going to be my last question. steve i would like you to address it and all of the panel, this is a very popular discussion about increasing it for childless adults who get no more than 500 or $800. for those who have children it can be as it significantly more generous. to the panelists believe that could happen, increasing it for

childless parents without increasing air? >> we talk about that but it's not really childless workers. it's people who do not have a qualifying child according to the eit c rules. they may have a child and be very connected to that child and so you get into these situations where i know what my reality is and i want to make the system work because i know with this policy is. i know what the policy is and i want to make it work. i think that is a potential for having impact on compliance. >> i'm a very poor political, i would hope they would pass our proposal to expand those programs and provide regulation of paid preparers a simplification proposal that's been in the budget for long time.

i would hope congress would do both and we have proposals out there that would enable it to do so. i think it's worth remembering that the proposals to expand the childless worker credit also broadens the age range. right now it's 25 - 64 to qualify for that small credit and the proposals would reduce the age in most cases 221 and some proposals would go up to 65 or 66 depending on the proposal. it would broaden the range of workers who could qualify so people who are now not eligible and not raising a qualifying child, they get zero on the earned income credit when they file a tax return. they would have some skin in the game and from that perspective there is less incentive for them

or their prepare to say well maybe we can get you the claim for this child one way or another and play a little fast and loose with the rules so that you come away with something in a refund rather than nothing. >> i'm also not a political forecaster but the bipartisan that we've seen the proposal suggests some possibility that it could be adopted on its own or as part of a broader tax measure, i certainly hate to think that you would have to adopt a package of compliance measures, waited few years to convince people that their working and maybe never be able to satisfy, and intermediate possibility would be the compliance measures and the expansion for the so-called childless workers could be adopted. >> let's just pursue with you or anyone knows this childless

worker. what percentage of childless workers would be individuals without children? >> i don't know the data source on that. i don't know if anyone else has seen estimates. >> i just know the proposal from the obama administration estimated it was ten or 20% of childless worker credit recipients had a noncustodial child. >> so no more than 20%, 80% would be the childless individual without a child at all. is that right or wrong question what. >> i can't recall what our estimates were at the time. maybe dana does.

i would say there's a really empathetic group as allen pointed out is included in the proposal and that his workers age 19 - 24 who cannot qualify now for the credit so that's a group we think is really important in terms of increasing their attachment to the labor force in helping them when they are probably at the lowest point of their earnings capability and really struggling to make ends meet. >> i would just say that even for those workers who aren't really childless, i think it makes sense to increase the eit c for them relative to where it is now because it clearly provides additional support for people who would have very low living standards and it is an enticement for them to enter in and remain in the labor market. you would not want to give the same amount of benefit to the childless adult as you would to a family but were very far from that type of situation simply because the existing benefit from this group is so small. there has to be some room to

expand it. okay, we have one last question and will go to the fellow in the blue blazer. maybe we'll get to, we have have a bunch of questions. building on the idea, supposing we can expand the childless worker funding, i would like to mitigate some of the trade-off of further separating out the earned income support of the eit c and i guess as allen was speaking about, perhaps consolidating the child credit in the earned income is intended to separate credits and also do

any of the other child tax credit provide any ideas about how you might better look at ways of determining what parents should qualify to receive the credit or do those also have the same problem? >> despite efforts to try to make more uniform these child definitions, there are still differences. john alluded to some. it can be a difficult test for anyone to try to comply with trying to figure out how to calculate that. again, a reference this idea of separating the worker credit and the child credit. they're absolutely right, if you

have to hold people homeless, this is very expensive to do this. there is a challenge and it's kind of against the kind of thing we should combine these to simplify into separating them out. again think there's lots of different policy at work. you could deal with the childless worker by just saying were going to have a worker credit. it's not reference to whether you have a child in the house or not so we just defined a way that part of it but clearly there are lots of trade-offs. i have one last question. one a make a point and that is that the eit c is the most effective program at reducing

poverty. it's very effective. it raises their total resources above the poverty line. that's the purpose and it succeeds at that purpose. i think we haven't emphasize that enough. however it somewhat unclear extent of which it's doing that. i wanted to ask about the sharing of data, and this is really controversial, but this sharing of data with the census bureau officials so we can really see the effect of the itc into households who are responding to census bureau survey. it's a little far off field but i wondered if there was any, there is is a new evidence-based policy commission that has started and i just wondered whether there's any discussion if that could better show the effectiveness of the antipoverty impact. >> i'm enough of a data geek. i think anytime we can share,

but i've also learned over time the value of the data firewall that we have with irs and census and how important that is so i'm kind of on the other end of the knowledge base of being able to address that. >> i think taxpayers haven't expectation that their tax data will be kept private and we have to respect that because i think that is something that supports voluntary compliance. i'd be a little concerned especially in this area that we would share the data with other agencies. census does have better data than we have about family structure when there are multiple households living together, but no one has better data on income and what people are climbing than the irs so i think that's an area where it's probably not worth the risk of data sharing, we probably have a pretty good idea just from the administrative data alone or just from the census data alone how well they are mitigating proper poverty. certainly there there are other areas in determining program

effectiveness where data sharing might be worth the risk, but we do have a culture here that your tax data is yours and you required to provide it so we are going to safeguard it and use it only for tax purposes. okay, we have had a great discussion and i want to thank all of you for being here and think our panelists and give everyone a round of applause. [applause]