In an overwhelming show of bi-partisan support, the Assembly today approved legislation by Assemblymember Mark Stone (D-Monterey Bay) that creates a policy framework for a state Earned Income Tax Credit (EITC). 

Sponsored by United Ways of California with co-sponsor Alameda County, AB 43 addresses the lack of income gains for working Californians in the Post-Great Recession economic recovery and provides a much-needed economic stimulus in the most economically distressed communities.

California has the highest poverty rate in the nation, according the Census Bureau’s Supplemental Poverty Measure. Nearly 1 in 4 Californians – over 8 million people, including 2 million children - lived in poverty in 2013. These are overwhelmingly working families; almost 70 percent had at least one working adult. Many families above the poverty line also struggle to make ends meet. Our United Way research shows 1 in 3 working families earn below the threshold of a basic needs household budget.

The federal EITC lifts more children out of poverty than any other federal policy.  That is why 25 other states have established state EITCs to supplement the federal credit. AB 43 and the Governor’s budget proposal would add California to that list.

We are very pleased to see a state EITC has become a priority for both the legislature and the Governor.  In the May Revision of the proposed 2015-16 state budget, Governor Brown proposed to allocate $380 million for the state’s poorest working families.  AB 43 builds upon that proposal by creating a policy framework to allow more low- and middle-income working families to become eligible for the credit, if the annual Budget Act funds them. 

The bill now goes to the Senate for consideration in a policy committee.