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1 Alan Cole, Changes in Refundable Tax Credits 1 (2014)

handle is hein.taxfoundation/taxfaat0001 and id is 1 raw text is: TA X
Mar. 2014      Changes in Refundable Tax Credits
No. 419
Alan Cole
Key Findings
Refundable tax credits add complexity to the tax code while
favoring certain kinds of economic activity over others.
For the year 2011, the IRS paid out $99.1 billion in refundable tax
credits, down from a peak of over $120 billion in 2009.
For comparison, the federal government spends more on
refundable tax credits than it spends on the Department of
Veterans Affairs ($63.5 billion) or the Department of Education
($71.2 billion).
The largest refundable credits currently are the Earned Income
Tax Credit, at $65 billion annually, and the Additional Child Tax
Credit, at $30 billion annually.
In the coming years, the dollar amount of refundable tax credits
is projected to double due to the insurance subsidies in the Patient
Protection and Affordable Care Act, which both the CBO and the
JCT projects to cost about $100 billion annually by 2017.
As the ACA subsidies come online, the total expenditures
associated with refundable tax credits are projected to surpass
$200 billion annually.
The phaseout of refundable tax credits as income increases
creates high implicit marginal tax rates, and, in some cases, can
create infinite marginal tax rates.

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