Democrats want full employment. Republicans want a free market where individuals can experience the dignity of work. And the global economy is concentrating work in jobs which enable individuals to gain valuable skills for their future careers. And the key to making this all work is the EITC.
The Earned Income Tax Credit has been a fixture of the American tax code since 1975, and has been expanded in various tax reform efforts, most notably the Reagan Tax Reform Act of 1986. It provides a tax credit to individuals earning low to moderate incomes, mostly those with children. It was designed and expanded to provide an incentive for work over welfare, that is, to make it more beneficial for individuals to move from welfare to work, rather than staying on the dole.
Other programs also contribute to the efficacy of the EITC, including SNAP, which provide food stamps to help poor families afford meals. Several corporations have contributed to the benefits that the EITC and SNAP programs provide to American workers and their communities, most notably Walmart and McDonalds, where employees are eligible, due to their competitive wages, for both EITC and SNAP. Conservative economists such as Greg Mankiw have weighed in on the benefits of the EITC, and have proposals to expand it.
The key to a healthy economy is a prosperous business class which has the means to hire workers and provide investments in the economy. To remain competitive with the rest of the world, and avoid jobs being shipped to low-wage countries, employers strive to pay the market rate in wages. Since the minimum wage is contrary to a free market, where wages should match market demand, it is anathema to maintain it, and even worse to increase it. Increasing it puts companies at risk of having to reduce the number of employees, or even go out of business altogether.
The nation’s prosperity, then, depends on a free market, low corporate taxes and low taxes on business owners who are the engine of job growth, and a rolling back of the minimum wage. And to make this all work, all that is needed is an expanded EITC and expanded SNAP.
Some will argue that this merely means that taxpayers will subsidize corporations so they can continue to pay substandard wages. But while there is a concern that continually reducing wages in conjunction with lower taxes on corporations and business owners will leave fewer and fewer individuals in the middle class to subsidize the wages of everyone else, this is not something that needs seriously to be taken into consideration. After all, if this great nation belongs to all of us, why shouldn’t middle income earners be willing to sacrifice a little to ensure prosperity.