California Must Do More to Help Working Families

California State Board of Equalization <a rel="nofollow" href="" target="_blank">Chairwoman Fiona Ma
California State Board of Equalization Chairwoman Fiona Ma, CPA at a volunteer income tax assistance (VITA) site helping the public learn about the California Earned Income Tax Credit (CalEITC).

It is tax time in America, and many Californians look forward to receiving their tax refunds in the mail. However, for millions of Americans, tax season provides another significant opportunity – applying for their Earned Income Tax Credit (EITC). Today is EITC Awareness Day, which is why I am bringing attention to this key tax credit many hard-working Californians qualify for, but have never heard about.

According to the Center on Budget and Policy Priorities, in 2015 the federal EITC contributed largely to lift 9.8 million Americans out of poverty, and helped make an additional 22 million Americans less poor. Many states have also enacted a local level EITC, and in 2015 California joined 25 states and the District of Colombia to offer a state EITC. California’s Earned Income Tax Credit (CalEITC) helps hard-working California families who are below the poverty line receive a little extra help to pay for necessities of life: groceries, school supplies, food, mortgages, and other bills that many of us take for granted.

Unfortunately, awareness around CalEITC was sorely lacking during its first year of implementation. While there is no ceiling on CalEITC money available, according to the Franchise Tax Board, only 385,000 families claimed approximately $200 million in 2016 – leaving approximately 50,000 more eligible Californians without the vital support of this cash-back credit.

For some families, even if they knew to apply for the credit, they likely don’t qualify, even though the income earned puts them woefully below the poverty line. According to the Public Policy Institute of California, in 2013, 78% of poor Californians lived in families with at least one adult working, excluding families made up only of adults age 65 and older. For 53.8% of those in poverty, at least one family member reported working full time. Currently, the maximum income for a Californian to be eligible for the CalEITC credit is $14,161 with up to 3 dependents. $14,000 is basically the cost of a car – and it’s not even close to minimum wage for full-time workers in this state. At California’s minimum wage of $10/hr, a full-time worker (working 2,080 hours each year, which is 40 hours each week) earns approximately $20,800 per year. It doesn’t make sense that working minimum wage in California exempts you from qualifying for the CalEITC!

When I was a VITA volunteer last year, I heard countless stories of hard-working taxpayers that deserved the credit, yet I had to look those people in the eye and tell them they couldn’t qualify for CalEITC even though they were barely making ends meet. This heartbreaking injustice is why Assemblywoman Anna Caballero and I are collaborating on AB 225 to increase eligibility for the CalEITC and create a realistic support system for those that need it most.

“The California Earned Income Tax Credit (EITC) is an important financial tool that supports our low- and moderate-income working families. In my district we have a high number of community members that may qualify for this tax credit, and I want to give my constituents more accessibility to better health, education, and employment, by empowering them with this financial benefit. It is because of the success of the EITC, that I am proud to author AB 225, which will help reduce poverty by giving California families the boost they need to thrive, while also stimulating our economy,” said Assemblywoman Anna Caballero.

AB 225 enables Californians making minimum wage to qualify for CalEITC, increasing the number of eligible families that qualify. Another benefit of AB 225 is that it adjusts the CalEITC credit based on minimum wage adjustments until 2020. The money allocated for the increased credit will go to working families who in turn will directly stimulate California’s economy through the purchase of taxable goods that are necessary for families to thrive in California.

California already has many challenges facing families – finding affordable housing and taxes on necessity items like diapers and tampons. We need to do more for working families to help reduce poverty in California. Join me in supporting AB 225 by contacting the Governor and your state representatives to let them know you #SupportCalEITC and AB 225.

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