The Ladder

A Blog from New America's Asset Building Program

Video: Showing the Power of the EITC in California

Published:  February 16, 2011
Sen. Carol Liu delivers opening remarks
Sen. Carol Liu delivers opening remarks

Yesterday's policy event, The Power of the Earned Income Tax Credit: Reducing Poverty, Creating Jobs, and Increasing Small Business Revenue, brought Capitol staff, advocates, and policymakers together to discuss what's changing with the EITC, and what that means for asset building.

The video, beginning with remarks from Senate Health and Human Services Chair Carol Liu, is available online, as is the presentation by Dr. Avalos. In the two months that remain until April 15th, people across the state will be trying to increase claims of this credit--and speaker Sean Casey of the Family Economic Security Partnership (FESP) provided an example of how to hit that target. 

The foundation of the discussion was provided by the Left on the Table research, which has continued to permeate statewide and national press since its release by the program last March. Reframing the EITC as a job-creator and sales-tax generator, and providing that powerful information at a local level, was exactly what groups like the FESP in Contra Costa County needed.

That group commissioned a local-level version of Left on the Table- and then brought Dr. Avalos, key local partners, and New America together for an event that yielded increased funding for free tax prep sites in the county. Casey discussed reaching out to local County Supervisors, telling how the data changed their responses from "head nodding," and agreeing that the EITC 'sounds good,' to saying "how much do you need?" That's power, and it's exactly the result EITC advocates have been working towards.

Lorie Declarador with the IRS gave background on a mailer sent to 46,000 Californians alerting them to possible EITCs left on the table. And she urged local advocates to find their representative champion- someone who could bring partnership, and who could provide a return address on a mailer that doesn't say 'IRS.' That hurdle- overcoming the fear and other negative associations people have with the Internal Revenue Service- will be an important part in efforts like Sen. Liu's to increase claims by 50%. 

Some questions arose, as well- especially regarding a state EITC. While this is a long-held goal for many, Dr. Avalos made a point that compares the immediate benefits of the federal program with that of a state credit: the federal EITC is new money coming into the state. That, however, could be balanced by the fact that, if California had a state EITC, takeup of the accompanying federal credit would also rise. Just having the Franchise Tax Board administering the credit would increase awareness- and, whether new or existing, more money would be circulating in local economies.

What are families doing with their credit, when they don't spend it? They save it- and thanks to recent federal rule changes, recipients of CalFresh (federally known as TANF) can save their entire EITC (and Child Tax Credit) for 12 months without the amount counting towards their asset limit. It's part of a policy landscape change that is slowly but surely becoming more conducive to asset building. And that, too, is power.

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