Earned income tax credit a key way to help working parents improve living situation
Tax season is now behind us. This year, UnitedWay Fresno and Madera Counties processed 7,500 tax returns for free through the Free Tax Preparation Service and brought more than $12 million in tax refunds back to our communities. What a big difference this made in people’s lives! Additionally, 70,000 household returns included refunds from CalEITC, the California Earned Income Tax Credit.
At first glance, these statistics don’t mean much to us, do they? However, people do. People like Jackie. She took advantage of our service for the first time last year. Jackie is a single working mom of three, and right off the top, she saved $150 by coming to us instead of paying a tax preparer.
All total, with tax refunds and credits such as CalEITC, she was able to buy a car. The hours and hours she used to spend traveling on the bus to and from work, to college and to her kids’ schools were cut down to minutes, leaving her more time to work and to spend with her family.
However, what Jackie really wanted me to know is that the extra money she received made a big difference in her life, changing it for the better. Shortly, she’ll be graduating and on the path to higher paying fulltime employment and will be opening many more doors of opportunity for she and her family.
I hear stories like Jackie’s all the time: real people working and yet still struggling to get by. She is one of 1.8 million working Californians that received CalEITC, a refundable tax credit for low-to-moderate-income working individuals and couples.
CalEITC helps families make ends meet. It allows them the margins to save for a rainy day, to buy new shoes without holes, to pay for child care so they can continue to work. Most importantly, CalEITC inspires hope.
According to the Center for Budget and Public Policy, EITC expansion in the 1990s was credited with being the most important reason employment rose amongst single mothers. Additionally, approximately one-third of EITC eligible residents move out of eligibility annually. How? They have hope and, like Jackie, they get a better job, they work more hours and they end up exceeding the CalEITC income threshold, which is the way it is intended: a hand up, not a handout.
This income progression is important to our economy and the reason why earned income tax credits, both state and federal, have historically received bipartisan support ever since being first advanced in Reagan’s 1986 Tax Reform Act.
Now California has a historic opportunity to invest in all of our struggling working families and to turn the tide for our entire state. Gov. Gavin Newsom is proposing to expand the CalEITC cost of living refund to more households, help more people and increase the maximum eligible income to $30,000.
Earned income tax credits are designed to encourage work and address the crisis we have created for working families. According to the 2018 United Ways of California Real Cost Measure Report, 96% of Fresno households currently struggling to get by have at least one working adult. This is not someone else’s story. You know someone who is struggling. This could be your story … or your neighbor’s, your brother’s, your best friend’s. Struggle, underemployment, cost of living increases — they are all real.
We have to do better. We will not rise as a city, a region, a nation, without hope for something better. We can break the cycles of poverty! Gov. Newsom’s bold proposal for $1.2 billion to expand CalEITC is an investment in our collective future. And it is surely much smaller than the cost of stop-gap poverty management we’ve been paying into for decades. Let’s advance together. Working families deserve better. Please join me in supporting this proposal.