At 03:52 PM 5/26/00 -0400, you wrote:
>Max Sawicky wrote: > How does the EITC [earned income tax credit] make a
>worker any more dependent on an employer (who else can you work for?) than
>a wage increase?
Doug writes:
>You only get the EITC if you have a job, so it doesn't reduce the cost of
>job loss. Wasn't the political point of the EITC to drive a
>wedge between the deserving and the undeserving poor?
msg writes:
>A wage subsidy implies higher income, which income ought to be of some
>help in getting thru the rough spots. You still didn't answer my
>question, which is why is the EITC any worse than a wage increase?
The EITC is works through the IRS [internal revenue service], an
organization which scares most people to death, especially now that the IRS
has decided to pump that cash-cow, the poor. Humor aside, it's traditional
to help the poor in the most bureaucratic, nosy, and authoritarian way.
Since the EITC got the IRS in the business of helping the poor, Congress
pushed it to make sure that it acted as bad as (or worse than) the welfare
case-worker. All of (or almost all of) the attention that the IRS is giving
to low-income tax payers is to make sure that there aren't "welfare
cheats." I bet that the involvement of the IRS keeps many of the working
poor away, keeping them from filing for it.
Also, unlike a wage increase, which works within the space limited by
supply and demand, the EITC is subject to decisions by Congress and/or the
President. That means that it cut be cut if the budget takes a turn toward
being a deficit or if the political balance shifts further to the right.
It's hard to tell which of these (a wage increase vs. the EITC) is worse,
but they do work according to different logics.
>I would say the political point of the EITC was that it was a politically
>feasible way of getting money to low-income families with children.
In the absence of the minimum wage, the wage subsidy would also allow
employers to hire people for less.
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
