We know that many people tune out when they hear bureaucratic terms they don’t understand. One is “earned income tax credit.”
Please bear with us because the earned income tax credit can help hardworking people struggling to make ends meet.
Let’s start with this: The concept is embraced by leaders across the political spectrum. Indeed, President Ronald Reagan was a champion – a fact seemingly lost on short-sighted Republicans in Washington, D.C., who are talking about reducing or eliminating Uncle Sam’s version of it.
What is the earned income tax credit? We are glad you asked. The short version is, it gives back to workers more of the money they’ve earned.
In California, the Legislature appears serious about expanding the state’s earned income tax credit to Californians who are self-employed – many of them participants in the so-called gig economy and doing things like ferrying around Uber passengers.
The Legislature’s budget conference committee approved this expansion last week as part of its spending plan, and we hope Gov. Jerry Brown approves it.
Currently, the California tax credit is only available to people who work for an employer, and make less than $6,717 if they have no children, less than $10,087 with one child, or less than $14,161 with two or more children.
But if the spending plan passes muster with Brown, the threshold will jump to $22,360. That’s enough to go from 600,000 eligible households to about 1.4 million.
This wrong-headed talk in D.C. of cutting also comes as the working poor need help. Their wages are rising, but not nearly as fast as housing prices. A recent report from the National Low Income Housing Coalition found that it’s no longer possible for anyone working a full-time, minimum-wage job to afford renting a two-bedroom apartment anywhere in the United States.
In California, someone would have to earn almost $31 an hour to rent a two-bedroom place without spending more than 30 percent of his or her income – a seemingly impossible feat for many these days.
Sure, the average earned income tax check – $524 – isn’t much. But it’s something. It can be used to pad budgets on everything from childcare to rent.
What’s more, the expanded credit will help ensure that people will be able to afford working in gig economy jobs, providing the necessary workforce of contractors for tech companies. Brown has opposed the self-employment expansion. He should rethink that.
The Uber drivers, the Etsy crafters, and others work hard for not much money. They deserve a break in the form of a check they’ve earned.