Some Democratic state lawmakers want to create an “earned income tax credit” in California that mirrors the federal government’s program. It could become a key part of state budget negotiations.
Three million California households received a federal earned income tax credit in 2012 – for a total of nearly $7 billion. It’s a refundable tax credit that’s intended to encourage work by benefiting low- and middle-income job holders.
Democratic state Senator Carol Liu acknowledges that the $120 million the program would cost could be spent elsewhere. But she says the legislature must do all it can to help Californians in poverty.
“This is a fundamental underlying problem – this discrepancy of wealth, the creation of a very poor class of people here. And it ought to be a priority,” Liu says.
The federal earned income tax credit is popular among Democrats and Republicans. The question is whether Governor Jerry Brown will support the added expense. His Department of Finance has yet to take a position, but the topic is expected to be part of budget negotiations over the next couple of months.