Every American willing to work should get paid enough for a decent lifestyle, but raising the minimum wage won't accomplish that — and instead will end up "crushing many workers possessing only basic skills," according to multibillionaire Warren Buffett.
In a commentary piece
for the Wall Street Journal posted Thursday night, the chairman and CEO of Berkshire Hathaway — the third-richest man in the world,
according to Forbes — argues "the better answer is a major and carefully crafted expansion of the Earned Income Tax Credit."
"Let’s replace the American Nightmare with an American Promise: America will deliver a decent life for anyone willing to work," he writes.
According to Buffet, the nation's widening income gap "is an inevitable consequence of an advanced market-based economy."
"The poor aren't poor because the rich are rich," he writes. "Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America's well-being."
You can wish all jobs paid at least $15 an hour, Buffett notes, "but that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty."
on the other hand, which provides a subsidy for low-income working families, is already available, with payments diminishing as a worker's earnings increase, Buffett writes.
"In my mind, the country’s economic policies should have two main objectives," Buffett argues. "First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity."
The EITC "rewards work and provides an incentive for workers to improve their skills," he notes. But just as important, "it does not distort market forces, thereby maximizing employment," he writes.
Buffett argues the current EITC needs "much improvement" — including stiffening penalties for fraud, well-publicized and free filing advice, monthly instead of yearly payments, and an increase in "dollars amounts … particularly for those earning the least."
"There is no perfect system, and some people, of course, are unable or unwilling to work," he writes. "But the goal of the EITC — a livable income for everyone who works — is both appropriate and achievable for a great and prosperous nation."
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