Sunday, June 22, 2014
Raising Earned Incomet Tax Credit might help poor, and stimulate economy more than raising minimum wage
Today, Fareed Zakaria, on Global Public Square, advocated improving the Earned Income Tax Credit (EITC) as putting more money back into the economy, as a better measure than increasing the minimum wage (which some say should be $10.10). Raising EITC floors (IRS link) would actually return more money to low income people and stimulate the economy because low-income people tend to spend more of what they can earn. The EITC is heavily weighted toward those with resident dependent children (the more the merrier), and discourages having investment income, which professional people normally will have. It does sound a bit “anti-capitalist” but some Republicans favor improving it.
The Center on Budget and Policy Priorities has a page on the EITC here. Policy advocates say that it does more than the minimum wage to lift people out of poverty.
As for the minimum wage, I actually was paid $6 an hour plus commissions for my first “post-fall” job in 2002. How would a minimum wage increase affect waiters and other tipped workers? The US is low compared to other "rich countries" in how the minimum wage relates to median income.