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The EITC is awesome. It is well established from many policy organizations as the most effective anti poverty (for current AND future generations) program we ha

The EITC is awesome. It is well established from many policy organizations as the most effective anti poverty (for current AND future generations) program we have today. It was wildly popular in conservative circles even. But somehow the success of it is never built on. It baffles me.

maxerickson 10y ago
A considerable portion of the US sees government spending primarily through the lens of direct morality. So hand wavy concerns about undermining the virtue of work end up blocking spending with clear long term net benefits.
- jnordwick 10y ago
  But the EITC adds to the virtue of work. It actually increases they payment for your salary increasing (to a point obviously). It straight supports the philosophy the more you work the more you should get paid. I think the problem might be that it is too well liked by both sides and neither side is willing to give the other a win, even if it a win for themselves too. I hate politics.
  - maxerickson 10y ago
    The hand wavy concern is about any government transfer.
  - winstonewert 10y ago
    Wouldn't it work out to subsidizing the employers? My expectation would be that employers would offer lower wages so that employees will have roughly the same take-home pay.
    - random28345 10y ago
      > My expectation would be that employers would offer lower wages so that employees will have roughly the same take-home pay. You are absolutely right, in the absence of a reasonable minimum wage, this is exactly what happens.
      - jnordwick 10y ago
        I'm going to need a cite for that. Pure craziness. A minimum wage contradicts the policy objective of the EITC to work and to to earn more money, get raises, etc.
        random28345 10y ago
        > I'm going to need a cite for that. You're going to need a citation for... employers seeking lower wages? And that these lower wages are subsidized by government benefits? The citation would be nearly every company, ever. So start with Walmart and work your way down, I guess. https://americansfortaxfairness.org/files/Taxpayers-and-Walmart-ATF.pdf https://americansfortaxfairness.org/files/Taxpayers-and-Walm... tl;dr: Taxpayers pay $5/hr in benefits to allow the employees of Walmart to be paid a wage under the poverty line. == EDIT == You would agree that rent subsidies flow to landlords, and mortgage tax deductions flow to sellers, right? Why would you not understand that wage subsidies flow to employers?
        jnordwick 10y ago
        No I'm going to need a cite for the EITC claim. I speaking about how it specifically aligns motivations and interests, because it is different than other welfare programs. Or are you just saying all welfare programs are bad? That's not a discussion I'm willing to engage in. On the edit - yes I agree that part of the subsidy is split, as with all subsidies, but I think the EITC uniquely incentivizes those in the program to work themselves out of it, unlike other programs. That's why I like it so much, because I think other programs do fall under your critique.
        random28345 10y ago
        > I think the EITC uniquely incentivizes those in the program to work themselves out of it, unlike other programs. That's why I like it so much, because I think other programs do fall under your critique. This experiment has never been done, but I think we could probably agree on the outcome of this thought experiment: In the absence of any other social programs, the net effect of EITC would be higher employment and lower (employer paid) wages as the demand for labor is (somewhat) elastic, and employers and labor will settle on a lower clearing price for hourly labor at a higher employment level. I also agree that many welfare programs have a negative impact on work and personal income, as many social services have cliffs that reduce a recipient's net income if their wage income goes over a certain amount. That's not necessarily bad; some people do not have the option of meaningful work, a problem that many think will be exacerbated by automation. If we start actually seeing the 42% unemployment rates that were recently promoted by Trump, then tying social services to income would be devastating.
    - jnordwick 10y ago
      No more than any other form of public assistance, and probably much less. You can make the same argument for food or cash assistance programs too. With other programs the worker would be discouraged from looking for a higher paying job or pushing for a raise. He's disincentivized, along with his employer, from being paid more. With the EITC he directly incentivized to look for a better paying job, work more hours, or get a raise. While not perfect, it is far better than other forms of public assistance. It about as good as you get with a welfare program in terms of aligning motivations and interests.
- evanpw 10y ago
  Up to a certain point, EITC payments increase as income increases, so it actually encourages work among low-wage employees. (Of course, it phases out at higher incomes, which discourages work).
  - maxerickson 10y ago
    Yeah I understand how it is structured. It really mostly supports up to 2.3 children. The max credits, from https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts-next-year https://www.irs.gov/credits-deductions/individuals/earned-in... $6,318 with three or more qualifying children $5,616 with two qualifying children $3,400 with one qualifying child $510 with no qualifying children The point is that lots of people see it as a negative because it is a government payout.
    - jnordwick 10y ago
      I plan to have children one day. Does that count as 0.3? :)

maxerickson 10y ago

A considerable portion of the US sees government spending primarily through the lens of direct morality. So hand wavy concerns about undermining the virtue of work end up blocking spending with clear long term net benefits.

jnordwick 10y ago
But the EITC adds to the virtue of work. It actually increases they payment for your salary increasing (to a point obviously). It straight supports the philosophy the more you work the more you should get paid. I think the problem might be that it is too well liked by both sides and neither side is willing to give the other a win, even if it a win for themselves too. I hate politics.
- maxerickson 10y ago
  The hand wavy concern is about any government transfer.
- winstonewert 10y ago
  Wouldn't it work out to subsidizing the employers? My expectation would be that employers would offer lower wages so that employees will have roughly the same take-home pay.
  - random28345 10y ago
    > My expectation would be that employers would offer lower wages so that employees will have roughly the same take-home pay. You are absolutely right, in the absence of a reasonable minimum wage, this is exactly what happens.
    - jnordwick 10y ago
      I'm going to need a cite for that. Pure craziness. A minimum wage contradicts the policy objective of the EITC to work and to to earn more money, get raises, etc.
      - random28345 10y ago
        > I'm going to need a cite for that. You're going to need a citation for... employers seeking lower wages? And that these lower wages are subsidized by government benefits? The citation would be nearly every company, ever. So start with Walmart and work your way down, I guess. https://americansfortaxfairness.org/files/Taxpayers-and-Walmart-ATF.pdf https://americansfortaxfairness.org/files/Taxpayers-and-Walm... tl;dr: Taxpayers pay $5/hr in benefits to allow the employees of Walmart to be paid a wage under the poverty line. == EDIT == You would agree that rent subsidies flow to landlords, and mortgage tax deductions flow to sellers, right? Why would you not understand that wage subsidies flow to employers?
        jnordwick 10y ago
        No I'm going to need a cite for the EITC claim. I speaking about how it specifically aligns motivations and interests, because it is different than other welfare programs. Or are you just saying all welfare programs are bad? That's not a discussion I'm willing to engage in. On the edit - yes I agree that part of the subsidy is split, as with all subsidies, but I think the EITC uniquely incentivizes those in the program to work themselves out of it, unlike other programs. That's why I like it so much, because I think other programs do fall under your critique.
        random28345 10y ago
        > I think the EITC uniquely incentivizes those in the program to work themselves out of it, unlike other programs. That's why I like it so much, because I think other programs do fall under your critique. This experiment has never been done, but I think we could probably agree on the outcome of this thought experiment: In the absence of any other social programs, the net effect of EITC would be higher employment and lower (employer paid) wages as the demand for labor is (somewhat) elastic, and employers and labor will settle on a lower clearing price for hourly labor at a higher employment level. I also agree that many welfare programs have a negative impact on work and personal income, as many social services have cliffs that reduce a recipient's net income if their wage income goes over a certain amount. That's not necessarily bad; some people do not have the option of meaningful work, a problem that many think will be exacerbated by automation. If we start actually seeing the 42% unemployment rates that were recently promoted by Trump, then tying social services to income would be devastating.
  - jnordwick 10y ago
    No more than any other form of public assistance, and probably much less. You can make the same argument for food or cash assistance programs too. With other programs the worker would be discouraged from looking for a higher paying job or pushing for a raise. He's disincentivized, along with his employer, from being paid more. With the EITC he directly incentivized to look for a better paying job, work more hours, or get a raise. While not perfect, it is far better than other forms of public assistance. It about as good as you get with a welfare program in terms of aligning motivations and interests.
evanpw 10y ago
Up to a certain point, EITC payments increase as income increases, so it actually encourages work among low-wage employees. (Of course, it phases out at higher incomes, which discourages work).
- maxerickson 10y ago
  Yeah I understand how it is structured. It really mostly supports up to 2.3 children. The max credits, from https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts-next-year https://www.irs.gov/credits-deductions/individuals/earned-in... $6,318 with three or more qualifying children $5,616 with two qualifying children $3,400 with one qualifying child $510 with no qualifying children The point is that lots of people see it as a negative because it is a government payout.
  - jnordwick 10y ago
    I plan to have children one day. Does that count as 0.3? :)