9 years ago
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America's Best Poverty-Fighting Tool May Be Even Better Than We Thought
The Earned Income Tax Credit has long been one of the wonk's favorite poverty-fighting tools. It's a tax credit available only to those who work, so it works as a powerful incentive to find employment. It also acts as a subsidy for low-paying jobs, which are often the only ones that the poor can find. And the money comes from the government, so it doesn't distort labor markets or meet resistance from employers, as the minimum wage does.
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The one problem I see is that raising the minimum wage will have the effect of driving up wages for everyone. The EIC doesn't do this.