By Toni G. Atkins
The state Legislature just wrapped up the 2015 legislative session. And working together, the Assembly, Senate and Gov. Brown have achieved some real successes for the people of California.
One of the highlights of the year was our balanced, on-time budget that invested heavily in public schools and higher education while also strengthening our rainy-day reserves and paying down debt.
But the achievement that fills me with the most pride is the establishment of a new state-level Earned Income Tax Credit (EITC).
The state EITC will provide desperately needed relief for roughly 2 million workers. It will lift 50,000 people out of poverty and another 50,000 out of deep poverty. It could help as many as 150,000 San Diegans with very low incomes.
Before this year, there had been at least seven attempts to create a state EITC since 2002. In 2015, we finally did it, joining 25 other states (plus the District of Columbia) that supplement the federal EITC with an additional state-level benefit for low-income working families and individuals.
Families that earn incomes up to $13,870 will qualify for the tax credit. Depending on the level of income, families can qualify for credits worth up to $2,653. Workers with no dependents who make up to $6,580 will qualify for credits worth up to $214.
A refundable credit — meaning it helps people who have an income from work but no tax liability — the EITC is money placed directly in the pockets of very low-income working people, and it will immediately be pumped back into the economy as recipients spend it on groceries and other essential goods and services.
Statewide, the EITC gives individuals and families an extra $380 million. Economists tell us that when we give low-income workers an additional credit of $1, the multiplier effect is worth $1.50 to $2. That means our new EITC will benefit local economies to the tune of $570 million to $760 million.
We must always remember that whenever we talk about widespread poverty, we’re talking about kids — nearly half of all children in California live below or near the poverty line. Poverty severely reduces our children’s chances for success later in life. Anything we can do to help their parents make ends meet is an investment in their — and, collectively, our — future.
The Earned Income Tax Credit is a proven way to fight poverty, give children a fighting chance and encourage employment. But it doesn’t work unless those who are qualified claim it when they file their tax returns. That’s why it’s important to get the word out and make sure that all workers in California who are eligible for this new credit claim it next year when they do their taxes.
As we educate Californians about the new state EITC, it also gives us an opportunity to remind workers about the federal EITC. The federal EITC is available to even more Californians — families earning nearly $50,000 a year can qualify for the benefit.
In 2013, the average federal credit was $2,373 in California. But participation rates are too low, ranging in recent years from 71 – 78.6 percent, depriving Californians — and our economy — of more than $1 billion per year in federal credits.
I’ll be working with community organizations and helping them disseminate the information so that we reach as many people as possible, and I’m encouraging other public officials to do the same.
The more people who claim the EITC, the better it is for us all.
—Assembly Speaker Toni G. Atkins (D-San Diego) represents the 78th District.