In an interview with CNBC today, billionaire Warren Buffett argued that raising the Earned Income Tax Credit would be a better idea than raising the minimum wage. While speaking with CNBC's Becky Quick, Warren said:
“The Earned Income Tax Credit I think is much clearer," Buffett said. "That puts more money in the pockets of people earning low wages and that’s what I’d like to see."And he does have a point about the EITC. According to an article in The Huffington Post:
A July study from the Center on Budget and Policy Priorities estimated that expanding the EITC by lowering the age of eligibility for childless workers would lift an additional 300,000 Americans out of poverty.The IRS also claimed that the tax break helped lift 6.6 million people out of poverty in 2011, which is the most recent year that full data is available. Buffett's remarks come on the heels of a report by the Congressional Budget Office which states that raising the minimum wage to $10.10 an hour would increase earnings for 16.5 million low-wage Americans but would also cost the nation about 500,000 jobs, as employers cut back on hiring to avoid adding to their payroll expenses.
It's easy to argue that big businesses should just suck it up and pay a higher minimum wage as they are currently sitting on tons of univested cash, but raising the minimum wage would also affect small businesses that don't have those same large cash reserves.
Raising the minimum wage is very popular among Democrats, Independents, and even a slight majority of Republicans. But while it is the most popular thing to do, and could be a winning argument this election year, is raising the Earned Income Tax Credit the better idea for the economy, or should another alternative be discussed? Sound off in the comments below.