LOS ANGELES – When Gov. Jerry Brown last year signed a bill that gave California’s working poor the right to keep more of their earnings under a new Earned Income Tax Credit (EITC) initiative, there was cause for congratulations and concern.
Advocates celebrated because the governor and legislature of the nation’s biggest state had supported a program that more than 20 other states were already providing to their low-income tax-paying residents. On the other hand, advocates were concerned because California had the nation’s third-lowest participation in the federal EITC program.
Can advocates for California’s 2016 tax credit program generate enough low-income tax filings to justify a continuation of the state’s EITC refund? A campaign funded by philanthropists and the state is designed to raise awareness of the new benefit through activities such as advertising and all-day free tax preparation workshops in low-income neighborhoods.
To qualify for California’s EITC a person must earn no more than $13,870 a year. On average those who apply for the credit will receive $900 back from the state. Families with three or more children could get back more than $2,500.
The federal EITC was launched by the Nixon administration in 1971 and was solidified as a U.S. program under President Jimmy Carter. Designed to reward work, the amount of the credit is calculated based on a percentage of earned income and the size of the household. Today, the EITC is the third largest federal program for low-income residents, behind Medicaid and food stamps.
The CalEITC awareness event in Boyle Heights was chaired by Joseph Sanberg, who through his Golden State Opportunity Foundation is providing most of the campaign’s financing to promote awareness of the new state benefit. Sanberg is the co-founder of aspiration.com, a digital financial services company.
“Many people in this community and throughout the state work hard for very low wages,” says Sanberg. “We should not tolerate this kind of economic insecurity. My mission is to help support the fight for basic economic security. The California EITC is a step toward addressing this need.”
Sanberg and the state assembly legislator who represents a district that includes Boyle Heights, Miguel Santiago, attended the awareness forum, an event designed to generate low-income refund requests in the East Los Angeles community by providing free tax preparation services. About 2,000 people came to the event.
“I serve the third poorest district in California,” said Santiago. “Eliminating the $40 to $80 my constituents pay for tax preparation means they have more money for groceries and other basic expenses.”
Angelica Gonzalez, a cafeteria worker and a mother four, was among those who attended the event because of the free tax preparation service. She paid $85 to have her taxes prepared last year but didn’t receive a state refund. She’s hoping for $1,000 under the state EITC refund program.
“If I get it, I’ll spend it on the kids,” she said. “This is important because the cost of living is so high and I need more money.”
Auto mechanic Enrique Ramirez, along with his wife, Virginia Cobis, said the campaign’s free tax service and rebate notice prompted them to attend.
“We need more money if we’re going to have a better life,” Ramirez said.
At 23, Eduardo Razo lives at home and works part-time in an animal clinic, earning less than $10,000 a year. “If I get the tax credit I will save it up. It's better to have the extra just in case,” he said, adding that his dream is to go back to college and pursue a career as a veterinarian.
The awareness event also attracted taxpayers and volunteers who hope to see the program expanded to low-income workers who are self-employed in California’s vast cash economy. Event volunteer Susanna Espinoza was among them.
“I myself don't qualify even though I work every day selling everything from shoes and socks to Tupperware,” she said.
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