American Dreams by Marco Rubio

employed and stay employed. The clunky-sounding Earned Income Tax Credit (EITC) is one such program.
    The EITC works by providing a tax credit for low-income families that work—but only to families that work. It effectively boosts wages by dramatically lowering taxes on low-wage workers. And because it’s a refundable credit, families can get a check even if they make too little to owe income taxes. It has been shown not just to encourage work, but to decrease poverty as well. The Census Bureau found that the poverty rate in 2011 would have been a full 3 percentage points higher—up to 19 percent—if it weren’t for the EITC and the Child Tax Credit. 16
    The EITC embodies the right philosophy: the importance of work, even for low wages, as the gateway to self-sufficiency. But it has significant shortcomings. It is paid only once a year in a family’s tax return, making it hard to plan a monthly budget around. And it’s a complex credit. That means the IRS makes lots of mistakes in awarding it and most families that claim it use professional tax preparers, which eat up a lot of their refund.
    There’s a better way for government to support work. I have proposed that we build on the success of the EITC by substituting it with the Wage Enhancement Credit for low-income workers. Under my plan, workers making less than $20,000 would receive a monthly 30 percent credit from the government. This would allow an unemployed individual to take a job that pays, say, $18,000 a year—which on its own is not enough to make ends meet—but then receive a wage enhancement to make the job a better alternative to collecting unemployment insurance. This wage enhancement would gradually diminish up to a yearly income of $40,000.
    Unlike the EITC, which delivers the wage subsidy in a once yearly lump sum, the Wage Enhancement Credit would be delivered monthly through a check from the Treasury. So instead of blowing the money on year-end vacations or flat-screen TVs, the money is more likely to be used for monthly living expenditures or even saved. Moreover, the wage enhancement would function like an increased minimum wage but with a critical difference: It would increase available jobs rather than decrease them. Nor would it force employers to pass higher labor costs along to consumers.
    An important final difference between the Wage Enhancement Credit and the EITC is that my proposal is directed at the individual, regardless of family size. It makes little sense not to encourage noncustodial fathers to work and be able to support their children. And as I will discuss in Chapter Seven, the marriage crisis that is at the heart of poverty and low mobility in America today is in many ways a crisis of marriageable young men. Unlike raising the minimum wage, which will reduce the available jobs for young fathers, supporting their wages and encouraging their work will help reintroduce the institution of marriage to a population that desperately needs it. And in order to ensure that families with children aren’t adversely affected by my proposal, part of my opportunity agenda includes an expanded Child Tax Credit. I will discuss this tax credit as well as my plan for a family-friendly tax code in Chapter Five.
    Together, the Flex Fund and a federal Wage Enhancement Credit would transform our approach to poverty by turning the dead end of government dependency into a pathway to work and independence. Because the system gives states new accountability for their antipoverty programs—and rewards them if they are successful—states will create incentives for the poor to prefer working and receiving the Wage Enhancement Credit to not working and collecting assistance. In fact, the states would be smart to use their Flex Funds to pay for greater wage enhancements for workers to further incentivize work. And once the poor have taken that first step through working, they’re more likely to stay on the path