On Friday, in a Wall Street Journal commentary that Warren Buffett published, we learn that Buffett advocates a “major and carefully crafted expansion of the earned income tax credit” as opposed to raising the minimum wage. Buffett also said that this method is a “better answer” to the widening income gap inequality between those who are living an “American nightmare” and individuals living the American dream.
Buffett believes that plans to increase the minimum wage “would almost certainly reduce employment in a major way,” writes the billionaire.
“In essence, the EITC rewards work and provides an incentive for workers to improve their skills. Equally important, it does not distort market forces, thereby maximizing employment.”
He makes several suggestions for improving the EITC, and they include stiffening fraud penalties and creating a monthly payment system instead of an annual one.