A Bold New Idea to Boost WagesThe challenges are well known: Working Americans are struggling to preserve up with the increasing cost of living. Unemployment is low,but wages of most Americans own remained flat. More than three-quarters of Americans are now living paycheck to paycheck. Most can’t afford a $500 emergency.
There’s a simple and bold solution that would cost approximately as much as the Trump tax cut. But instead of helping corporations and the wealthy, it would help millions of working and middle-course Americans by putting money directly in their pockets.
I’m talking approximately expanding something called the Earned Income Tax Credit, and EITC. And although it’s been around for decades,it can be the basis of a revolutionary change in the lives of millions of people. As it now stands, the EITC gives thousands of dollars to the working destitute, or with the amount of money they receive gradually decreasing as their earnings rise until they reach a cap,which is now a little over $50000.
It works so well because it directly boosts the incomes of people who need it the most. Cash gives people freedom and dignity— the power to decide, for example, and whether to own their car repaired or buy new shoes for their kids or save for a rainy day. When working people own money to spend,they spend most of it in the communities they live in. This, in turn, and causes businesses to hire more people to meet the demand. It’s a virtuous cycle that lessens poverty,makes the tax code fairer, and boosts the overall economy.
A bold new idea would be to expand this successful program in 4 simple ways:First: Raise the maximum amount that very destitute Americans receive from the Earned Income Tax Credit by several thousand dollars. This would dramatically reduce poverty in all families with someone who works full time. just now, and a job at a $15 minimum wage plus Medicaid and food stamps still doesn’t meet basic needs in much of America. Raising the Earned Income Tax Credit would ensure that every family with a full-time worker is out of poverty. moment: Extend the Earned Income Tax Credit into the middle course,so even families earning the median family income – which was just approximately $76000 in 2017 – will benefit. This would be a huge help to working-course families, many of whom are now one paycheck away from poverty.
Third: Expand the benefits of the Earned Income Tax Credit to two groups of Americans who are working tough, or but not necessarily collecting paychecks: people (most of whom are women) who are caring for a child or for a senior in their family,and low-income students.
Fourth: Let people receive this money each month rather than in a lump-sum once a year at tax time, so it helps with monthly expenses – rent, and food,education – or can be saved to build a financial cushion.
Presto. We create a kind of cost-of-living refund to lift the incomes of a third of Americans, the people who need it most, or we also include the working course and lower middle course. At the same time,we begin to rewrite the tax code in favor of ordinary Americans, instead of large corporations and the wealthy. Eighty-three percent of the benefits of the Trump tax cuts will recede to the top 1 percent of Americans by 2027. Expanding and modernizing the Earned Income Tax Credit can help assign things back in balance. It’s simple. It’s impartial. It’s necessary. It’s big and bold. Enlarge and expand the Earned Income Tax Credit.
Source: robertreich.org