The Governor’s proposed state Earned Income Tax Credit (EITC) would boost the incomes of hundreds of thousands of low-income families across California. Eligibility for the state EITC would be restricted just to households with very low incomes, but they would receive a larger credit than what is typically offered by other states with state EITCs. As we explained last week, this design would substantially increase incomes for California’s lowest-earning workers and their families. On top of this, this proposed state EITC would be a meaningful investment in communities struggling with high rates of poverty.
A look at who claims the federal EITC in each California county offers insights into which counties will most benefit from a state EITC. While there is not readily available public data that allows us to precisely estimate the number of households in each county that would receive a state credit under the Governor’s proposal, families with very low incomes who claim the federal EITC are likely to claim the state EITC as well. So, data on federal EITC participation allow us to approximate the share of households in each county that the Governor’s proposed state EITC would reach.
The table below shows estimates of the share of households that likely would have claimed the Governor’s proposed credit had it existed in 2012. Unsurprisingly, many of the counties that would have had comparatively high rates of state EITC participation had high rates of poverty. Of the counties with the 10 highest shares of expected state EITC claimants, 6 ranked in the top 10 for poverty rates for California in 2012. For example, Tulare, Fresno, and Lake counties, where around 1 in 15 families would have claimed the Governor’s proposed state EITC, had the three highest poverty rates in California in 2012. Moreover, counties with high poverty rates but lower rates of expected participation in a state EITC – like Madera County – underscore the need for outreach and community engagement to boost participation in both the federal and state EITC programs.
The Governor’s proposed state EITC would give a substantial boost to working families struggling to make ends meet. Though it would reach a small share of all households in each county, a state EITC would provide these families with a substantial and much-needed economic boost. By allowing workers to keep more of their earnings, it would put money in their pockets and put money into local communities struggling with high rates of poverty. This would make a state EITC an essential part of any multi-faceted strategy to increase economic security in these areas.
— Luke Reidenbach
About the Data
This table adjusts county-level data on federal ETIC participation from Brookings Institution to get at a closer estimate of the number of households who would have claimed the Governor’s proposed state EITC in 2012. The Brookings Institution database provides the number of households, by income bracket, who claimed the federal EITC. The income brackets that are relevant to this analysis are $1-4,999, $5,000 to $9,999, and $10,000 to $14,999, which represent the full range of income at which a household could be eligible for the Governor’s proposed state EITC. The number of households claiming the federal EITC in each income segment is then adjusted for the share of households in each income bracket that have zero, one, and two or more dependents, using national data from the Congressional Research Service. For example, in 2012, 36.5 percent of all EITC claimants with incomes between $10,000 and $14,999 were filers without qualifying children. Under the Governor’s proposed state credit, childless adults in this income range would not be eligible for a state credit, so the number of federal EITC claimants in this income bracket is adjusted accordingly for each county.