UWCA Testimony Supporting A State EITC - United Ways of California

UWCA Testimony Supporting A State EITC

Thursday, May 21, 2015

UWCA’s testimony before the Assembly Committee on Revenue and Taxation in support of AB 43 (Stone), Monday, May 18, 2015:

“Good afternoon, Chairman Ting and Committee members. I’m Pete Manzo, President/CEO of United Ways of California, the state association for California’s 34 local United Ways. United Way works to improve health, education and financial stability for low-and moderate-income families, three interrelated building blocks of a good life. We are proud to co-sponsor AB 43.

California has the highest poverty rate in the nation, according to 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.

Thankfully, the EITC is a proven tool for fighting poverty. 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.

If enacted, AB 43 would help lift over 178,000 Californians, nearly half of them children, out of poverty, and would improve financial stability for over 3.1 million, including 1 million children.

A state EITC also would boost local economies. People tend to use their refunds to make larger necessary purchases, such as car repairs, first-and-last months’ rent, or paying off debt, and each dollar received by a tax filer can generate an additional $1.50 – $2 in local economic activity, according to a study of other state EITCs.

A refundable state EITC would be good for California’s long-term future. Research shows children whose families receive more income from refundable tax credits do better in school, are more likely to access higher education, and may even earn more as adults.

We are very excited to see a state EITC becoming a priority among legislators and the Governor. And we believe AB 43 offers the best approach. It combines two elements we believe are especially important: (1) enhanced reimbursement for families with children, at least one child under 5, when the impacts of poverty can be most damaging, and (2) eligibility that matches the federal EITC, which assists workers with income up to $47,000 for a single parent and 3 or more kids.

This is critically important for many families slightly above the poverty line who earn too little to make ends meet, but earn too much to qualify for other public supports.

We are proud to sponsor AB 43, and we look forward to working with Assemblyman Stone and other stakeholders to ensure a state EITC can indeed reduce and mitigate poverty in California.”

Peter Manzo

Pete Manzo is President & CEO of United Ways of California, which improves health, education and financial results for low-income children and families by enchancing and coordinating impact and advocacy work of California’s United Ways.

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