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One of things I've been thinking about lately is the heated minimum wage debate. Should we raise it or should we not? And one of the things I noticed when looking into this further is that although raising the minimum wage would definitely increase the incomes of lower wage workers, it would also create some unintended consequences such as putting smaller businesses who can't afford to pay the higher wages out of business, an increase in unemployment, and inflation.

Thinking so then what's the solution, I decided to research a little bit. And one policy tool I came across that has not been mentioned by anyone I talk to is Earned Income Tax Credit. For the tax year of 2018, if you're a single with zero children that made less than $15,270 (in adjusted gross income), you're eligible for up to $519 in tax credit.

Well, what if instead of constantly raising the minimum wage, we instead looked into expanding Earned Income Tax Credit so that more lower wage workers can keep more of their income? I mean as someone who's more politically left leaning, it would definitely make sense to me for two reasons:

  1. It would reduce the amount of taxes on the poor.
  2. It would allow for the current minimum wage we have to become a more livable wage.

More on EITC here: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts

One of things I've been thinking about lately is the heated minimum wage debate. Should we raise it or should we not? And one of the things I noticed when looking into this further is that although raising the minimum wage would definitely increase the incomes of lower wage workers, it would also create some unintended consequences such as putting smaller businesses who can't afford to pay the higher wages out of business, an increase in unemployment, and inflation. Thinking so then what's the solution, I decided to research a little bit. And one policy tool I came across that has not been mentioned by anyone I talk to is Earned Income Tax Credit. For the tax year of 2018, if you're a single with zero children that made less than $15,270 (in adjusted gross income), you're eligible for up to $519 in tax credit. Well, what if instead of constantly raising the minimum wage, we instead looked into expanding Earned Income Tax Credit so that more lower wage workers can keep more of their income? I mean as someone who's more politically left leaning, it would definitely make sense to me for two reasons: 1. It would reduce the amount of taxes on the poor. 2. It would allow for the current minimum wage we have to become a more livable wage. More on EITC here: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts

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[–] [deleted] • 2 pts

For a $15K poverty-level individual, I usually see that $519 windfall currently as possibly just spending more on food and shelter. However, if they kept a lot more, they could spending money on not only food and shelter but buying other goods that they otherwise would not be able to afford.

And I also agree that the minimum wage rates should be handled by the local-level governments (city, state, county) instead of the federal government. If you look at the average wage you'd need to make in order to afford a two bedroom rental home or apartment in different states, it is significantly higher in California than it is in New Mexico: https://reports.nlihc.org/oor

[–] • 2 pts

So just like the dollar goes farther in certain locales, how can it be fair that $519 per person would be equally beneficial to all who qualify, no matter where they live and work?

The cost of, as you guess, food/shelter would likely just increase by $519 because "nobody" wants the "X - $519" living conditions, and now there is high demand for the "X + $519" living conditions, so the price rises and really nothing was accomplished.

[–] [deleted] • 0 pt

What I meant is that most of the money would be spent on food/shelter if the EITC caps stayed where they were. This is essentially having lower taxes on those with lower incomes and using this policy as a tool to benefit the economy because if they got higher income tax credits, they'd be able to spend more on goods other than just focusing on food and shelter.

Regarding locales, this is where I would say the local governments themselves also need to step in and expand their earned income tax credit programs as well in accordance with the needs of their areas because like you mentioned, the federal EITC will not be entirely beneficial for everyone who is eligible.