Gov. Gavin New­som and other Democrats are look­ing to raise fees on the wealthy to help min­i­mum-wage work­ers.

The Tribune (SLO) - - Front Page - BY ADAM ASH­TON AND EMILY CADEI aash­[email protected] [email protected]@mc­

Demo­cratic pres­i­den­tial can­di­dates Ka­mala Har­ris and Cory Booker are tout­ing Robin Hood tax plans that would raise fees on the wealthy to boost in­comes of the poor and mid­dle class.

Cal­i­for­nia Gov. Gavin New­som has one, too, and his pro­posal might ac­tu­ally be­come law.

Their plans are among many pro­pos­als Demo­cratic lead­ers around the coun­try are putting for­ward this year to di­vert money from the wealthy and get more cash in the pock­ets of lower- and mod­er­ate-in­come house­holds, par­tic­u­larly in states with a high cost of liv­ing.

They build on the fed­eral earned in­come tax credit, a ben­e­fit that pro­vides up to $6,557 for work­ing peo­ple with low to mod­er­ate in­come.

Har­ris’ and Booker’s plans would ex­pand the fed­eral ben­e­fit. They’re un­likely to be­come law as long as Re­pub­li­cans hold the ma­jor­ity in the Sen­ate, but they’re mark­ers show­ing what Democrats would try to do if they re­gain the White House.

New­som’s is one of sev­eral pro­pos­als in state­houses that would in­crease sim­i­lar cred­its of­fered by state gov­ern­ments. They’ve been raised by law­mak­ers this year from Wash­ing­ton to Maine.

The idea is to help min­i­mum wage work­ers or peo­ple who can’t work full time pay their bills and gain some fi­nan­cial sta­bil­ity.

“Peo­ple who are work­ing need to be able earn enough to make ends meet and feed their fam­i­lies,” said Adam Ruben, cam­paign di­rec­tor for the ad­vo­cacy group Eco­nomic Se­cu­rity Project. “States need to raise the min­i­mum wage and hand in hand with that ex­pand the earned in­come tax credit.”

Cal­i­for­nia is one of 29 states that have an earned in­come tax credit, but Cal­i­for­nia’s is a com­pa­ra­bly nar­row one, ac­cord­ing to the Cal­i­for­nia Bud­get and Pol­icy Cen­ter.

Other states of­fer an earned in­come tax credit to any house­hold that is el­i­gi­ble for the fed­eral ben­e­fit. This year, that in­cludes fam­i­lies with two chil­dren and in­come up to $51,492, ac­cord­ing to the IRS.

Cal­i­for­nia’s tax credit phases out for house­holds when their in­come hits about $25,000, ac­cord­ing to the Fran­chise Tax Board. Still, it can be a gen­er­ous ben­e­fit for fam­i­lies with very low in­comes. A house­hold with two de­pen­dents and an in­come un­der $7,550 could re­ceive $2,559, ac­cord­ing to the Leg­isla­tive An­a­lyst’s Of­fice.

New­som would greatly ex­pand who is el­i­gi­ble for Cal­i­for­nia’s credit. He’d raise the max­i­mum qual­i­fy­ing in­come to $30,000, cre­ate a new $500 credit for qual­i­fy­ing fam­i­lies with chil­dren un­der age 6 and in­crease the amount of money Cal­i­for­ni­ans can re­ceive from the ben­e­fit, ac­cord­ing to his bud­get pro­posal.

In 2017, 1.5 mil­lion Cal­i­for­nia tax­pay­ers re­ceived $348 mil­lion from the earned in­come tax credit, ac­cord­ing to the an­a­lyst’s of­fice.

New­som’s pro­posal would make about 3 mil­lion house­holds el­i­gi­ble for the ben­e­fit and potentially raise state spend­ing by about $1 bil­lion.

He’s also propos­ing a change in how ben­e­fi­cia­ries re­ceive the money, al­low­ing them to en­roll for monthly pay­ments. That means a fam­ily qual­i­fy­ing for $2,500 credit could choose to claim it by get­ting a cou­ple hun­dred dol­lars a month.

That part has ad­vo­cates for low-in­come Cal­i­for­ni­ans par­tic­u­larly ex­cited.

“As we know fam­i­lies are of­ten see­ing bud­get short­falls ev­ery month, so re­ceiv­ing a lump at the end of the year doesn’t do as much good as reg­u­lar pay­ments,” said Teri Olle, the Eco­nomic Se­cu­rity Project’s Cal­i­for­nia cam­paign di­rec­tor.

New­som’s pro­posal in the­ory has a lot of sup­port from Democrats who’ve voted to ex­pand the state’s earned in­come tax credit in­cre­men­tally since 2015.

“No­body should work full time and live in poverty,” said Assem­bly­man Phil Ting, D-San Fran­cisco. “We’re talk­ing rent and food. Th­ese are things that are not seen as just nice to have. Th­ese are have to have.”

The chal­lenge for New­som is that he wants to pay for it by rais­ing taxes on cer­tain busi­nesses. He’d do it by bring­ing parts of the state’s tax code into con­form­ity with changes the Re­pub­li­cans in Congress made in their 2017 fed­eral tax over­haul.

That would re­quire a two-thirds ma­jor­ity in the Leg­is­la­ture, and New­som might not get it.

“It’s a huge amount of money on­go­ing,” said Ting, who is the Assem­bly’s Bud­get Com­mit­tee chair­man. “You wouldn’t want to com­mit to it to­day and then ramp it down to­mor­row.”

The Leg­is­la­ture has briefly dis­cussed New­som’s pro­posal in early bud­get hear­ings. It’s ex­pected to re­turn in June when the Leg­is­la­ture con­sid­ers a fi­nal bud­get.

Out­side of Sacra­mento, so-called cost-of-liv­ing re­funds are key plat­forms on the 2020 cam­paign trail for Democrats.

Har­ris un­veiled a tax pro­posal last fall — “LIFT the Mid­dle Class Act” — that aimed to cre­ate a tax credit on top of the EITC for work­ing peo­ple, whether or not they have chil­dren. Sin­gle peo­ple within cer­tain in­come brack­ets would be el­i­gi­ble for a $3,000 an­nual credit and mar­ried cou­ples would be el­i­gi­ble for $6,000. The credit would com­pletely phase out for in­comes over $100,000.

A 2017 pro­posal from Ohio Sen. Sher­rod Brown and Cal­i­for­nia Rep. Ro Khanna of Fre­mont would also ex­pand on the EITC’s suc­cess in com­bat­ing poverty. Rather than cre­at­ing a sep­a­rate credit, as Har­ris’s bill would do, Brown and Khanna’s GAIN Act would dra­mat­i­cally ex­pand the EITC it­self, for fam­i­lies with chil­dren as well as sin­gle adults.

Adam Ash­ton: 916-321-1063, @Adam_Ash­ton Emily Cadei: 202-383-6153, @emi­ly­cadei

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