This N&O article offers an appeal to preserve the refundable portion of North Carolina’s Earned Income Tax Credit. HB 93 and SB 117 both propose to eliminate the refundable portion of the state’s EITC.
For those unfamiliar with the EITC, it is basically a sliding-scale tax credit for those who are working and earning an income below a certain threshold. The more they earn, the smaller the credit. The refundable part comes in to play when the size of the EITC is larger than the actual amount of taxes owed. In this case, a refund check is sent to the individual for the difference.
North Carolina implemented a state-level EITC a few years ago and set it at 5% of the federal credit. In other words, whatever the credit calculated by the federal EITC, the state calculates its own credit for people’s state taxes at 5% of the federal amount.
In the N&O article, the author tries to appeal to conservatives to make her case
The Earned Income Tax Credit was a favorite of Ronald Reagan, who called it “the best anti-poverty bill, the best pro-family measure and the best job creation measure to come out of the Congress of the United States.” Years of research have borne out the reasons for Reagan’s enthusiasm.
This of course is a sad attempt at using a strain of the appeal to authority logical fallacy so popular among liberals. They think that if they just invoke the name of a prominent conservative who supported a certain measure, conservatives will fall right in line.
But such a desperate use of this fallacy shows the shaky ground of the author’s argument. She proceeds:
The EITC brings people into the labor market, which is a boon for employers, for workers and for the local businesses where EITC dollars are spent.
As is always the case with defenders of big government, no mention is made of where the money first comes from to pay for this program. The “boon” mentioned here necessarily must be offset by job losses dispersed throughout the state due to the government’s shifting of scarce resources. And discussing the boon to local economies where the EITC dollars are spent shows the author’s ignorant adherence to the myth that consumer spending is the cause of economic growth.
In an era of stagnating wages and benefits, the EITC is an essential bridge that allows families, particularly those with children, to escape poverty while they work their way up the job ladder.
But why would wages and benefits be “stagnating?” The intellectually uncurious author neglects to pause for even a moment’s thought into how wages grow. Wages grow along with productivity. Productivity is enhanced by productive capital investments. Capital investments are fueled by savings. So the policy of shifting resources away from savings and investment and diverting them toward funding unproductive activities (such as seen by the EITC), is what causes stagnant wages and helps keep more people mired in poverty.
The rungs of the “job ladder” are cut off by the very government programs the author is advocating for.