Or, more aptly said “lions, tiger and bears! Oh my!”
Yes, Virginia, people cheat the system. Change the system, and people will cook up new ways to cheat.
Of course, pairing “tax cheat” with “Illegal alien” makes for an exciting and alluring news item.
The tax preparer groups that I belong to are just a-buzz over this. Several are proposing that ALL refundable tax credits be ended.
What it comes down to is this: people will cheat. The only thing a system can do is to have effective tools in place to catch the cheating as quickly as possible and stop it. The EIC and Child Tax Credit are a ridiculous boondoggle that have been in place for decades and have been abused for decades.
That, and in my experience, most retail tax preparers (meaning, those that work primarily with people who want their refunds and right away) are unclear about the standards and rules but ARE clear on the forms and the boxes to check that result in clients being happy with a larger refund and thereby send them more business. Combine effective fraud detection tools and regulation/training of tax preparers and you’ll have less fraud.
Until, that is, someone is creative enough to think up a whole new way to cheat.