Friday, January 11 2019

Gavin Newsom’s ambitious plan to cut poverty in California

Written by Dylan Matthews

Gavin Newsom, the newly inaugurated governor of California, has a big proposal for low-income people in his first budget: more than doubling the state’s Earned Income Tax Credit, or EITC. It’s a change that will put hundreds or thousands of extra dollars in the pockets of millions of poor and working-class Californians.

You might have heard of the federal EITC. It’s the largest dedicated anti-poverty program in the federal budget; in 2016, it kept an estimated 5.8 million people out of poverty, and made another 18.7 million people less poor. But most states (29 plus DC, to be precise) also have state EITCs, to offer additional support.

California’s state EITC is relatively recent, coming into effect in 2015. And unlike the federal credit, it’s specifically targeted at the very lowest-income Californians. If you’re a single parent of two, for instance, you can claim the federal EITC if you make as much as $45,802. In California, though, only parents making under $24,950 (or nearly half the federal maximum) would qualify. Until an expansion in 2017, the maximum income was less than $15,000.

That means that for very low-income people — say, a single mom of two who only makes $7,300 a year — the California EITC can be nearly as valuable as its federal version. This interactive from the California Budget and Policy Center offers a good illustration:

California EITC parameters

But it also means that slightly less poor — but still very much poor! — families have been left out. The credit has been gradually expanded in a variety of ways since its introduction (getting rid of a maximum age of 65, lowering the minimum age of 25 to 18), but Newsom’s budget proposal suggests the biggest increase to date, by far.

This article was sourced from Vox

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