Creating a State Earned Income Tax Credit (EITC): Key Budget Center Resources on the Issue

In last week’s May Revision to his 2015-16 state budget, Governor Jerry Brown called for California’s first-ever state Earned Income Tax Credit (EITC). The proposed $380 million state credit would be an “add-on” to the successful federal EITC, providing a refundable tax credit to Californians with incomes of less than $6,580 (for those with no dependents) ranging up to $13,870 (for those with three or more dependents). The average household credit would be $460, and the maximum benefit would be $2,653. Up to 2 million Californians are expected to benefit from this proposed state EITC.

Our organization has a long history of pointing out that a state EITC in California — one of 25 states without such an add-on to the federal EITC — would be an effective way of supporting working individuals and families. As we pointed out in our statement on the May Revision, the Governor’s EITC proposal represents an important first step toward reducing economic hardship and expanding opportunity.

With deliberations around creating a state EITC for California gearing up, we wanted to highlight some of our recent resources on this approach to promoting financial security for working Californians.

Report


A State EITC: Making California’s Tax System Work Better for Working Families

This in-depth Budget Center report discusses the benefits of establishing a California EITC and some of the policy and design questions involved in creating one.

Presentation


How a State EITC Could Reduce Economic Hardship in California
In late February, Assembly Budget Subcommittee No. 1 on Health and Human Services held a hearing on potential poverty-reduction strategies. The Budget Center provided invited testimony on how a state EITC could help address economic hardship.

Blog Posts


Top Things to Know About a State EITC for California
Based on our full report on creating a California EITC, this post highlights some of the main points about how a state EITC works how it could be designed to be most effective.

How Would Current State EITC Proposals Benefit California’s Workers and Their Families?
This post examines major EITC proposals that preceded that put forth by Governor Brown last week, offering some valuable context as to potential ways of structuring a state EITC.

A State EITC Would Complement Other Public Supports That Boost Families’ Economic Security
This post looks at how a state EITC would interact with CalFresh food assistance and CalWORKs cash assistance to support families and children.

Your Resources for Understanding the Debate Around Creating a State EITC in California
Featuring information and commentary from the Budget Center as well as from other sources, this post offers a broad base of materials on establishing a state EITC for California.

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In the coming days and weeks, the Budget Center team will provide additional analyses of the Governor’s proposal to create a state EITC for California, highlighting the key issues facing policymakers in moving the idea forward.

— Chris Hoene