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With all this talk lately about income inequality and efforts around the country from cities and states to the half-hearted Federal proposal on raising the minimum wage, I thought it might be worthwhile to take a look at the conservative alternative to a minimum wage increase.

The Earned Income Tax Credit receives much support from typical conservative pundits whenever they are forced to discuss ways to address income inequality.  The EIC is, of course, the conservative solution; which sets my alarm bells ringing.  The claim, from the right, is that increasing the EIC without increasing the minimum wage is a much better solution to income inequality and directly benefits working Americans without the much touted job losses we're sure to suffer if we dare raise the minimum wage.

A cursory examination of the EIC and who is eligible shows why the EIC alone is hardly the panacea to income inequality the right would have you think it is.

First, the EIC is a tax credit.  You have to file taxes to receive the one time payout from your tax refund.  The problem with this is it can't and won't allow lower income Americans to utilize it for budgetary purposes.  Evidence already exists that shows lower income tax payers using their refunds as a savings account for large purchases.  It doesn't become part of a worker's monthly budget.  What, then, can the EIC do throughout the year to improve workers' lives?  Not much.

Second, who qualifies for the EIC?  According to the IRS, not everyone can get the EIC.  And of those who do not everyone gets the same amount.  If you're single with no children, you're out of luck.  Single people making less than slightly more than $14,000 a year would be eligible for a minimum EIC refund.  That figure becomes roughly $19,000 for a couple without children and the maximum EIC benefit for these people is just under $500.  That works out to about $41.00 / month or $0.24 per hour increase in full time wages---assuming you can find a full time job these days.  How is that supposed to address the issue of income inequality for childless individuals and couples?  It doesn't.  

Instead it creates a class of workers who receive little to no benefit from the EIC.  And don't think it stops just with childless individuals and couples.  Even if you have children, those children must meet certain requirements to qualify as dependents before you can get the credit.  Are they grown?  Out on their own?  Well, guess what gramps, you're not getting any help from the EIC.  Back to living off just a minimum wage for you.

Third, who is actually funding the EIC?  The Federal government is the distributor of funds under the EIC program, but they aren't the ones paying for it.  You are.  Not you, as in a generalized you.  I mean you specifically.  Not Warren Buffett.  Not GE or Apple or the Koch brothers.  You.  Those guys have enough lawyers and accountants to make sure their share of the tax pie is as small as possible.  When it comes time for all boats to be lifted, the Feds aren't looking to the 1% to raise the water...they're looking at you.

The EIC is a mechanism for taking from the have-nots and giving a meager amount to the have-even-lesses.  Of course the top income earners love the EIC...it doesn't affect them at all.  They can still pay less-than-subsistence wages, still receive billions in corporate welfare, still reap the benefits of a system set up to ensure their continued ascendance over the unwashed masses.

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