>Earning $8,000/year with a child or two doesn't
seem to be very appealing.
>Would you or I want to live under these
>While the marginal effects may seem interesting
for economists - NOT ONE
>ECONOMIST would ever want to have to be subjected
to the EITC.
Incredibly true, Jason. I also think that most econs fail to realize that a lot of people don't even know about the EITC. My sister's been making crap wages for years and she only found out about two years ago. My dad does people's taxes for extra income during his 'retirement' years. You wouldn't believe how many people don't have a clue and if it weren't for the fact that he likes to give people free advice, they'd probably never know. As for this wage subsidy issue, I think you econs underestimate how little the EITC actually figures into most people's thinking about their weekly spending habits. Are people motivated to act in certain sorts of ways because of it? I really doubt it. Every person I know sees income tax refunds as a kind of bonus, something that one can use to do something fun with, stick in the bank, pay off debts. They rarely ever see it as a source of income with which to pay their everyday bills. I could be wrong, but maybe you guys have some stats on how many people collect the EITC as a refund and how many receive it as part of their paycheck. That ought to be a good indicator of how people 'use' and think about the EITC.
Not that I think you should get rid of it, because I'm glad that it exists right now. I *need* it. Still, I do agree that the EITC is a problem becuase it does, in the long run, simply uphold a system that sucks in the first place.