Low-Income Working Families Increasing Economic security is out of reach for a growing number of working families in the United States, according to a new analysis of data from the U. The number of low-income working families rose from Casey, Ford, Joyce, and C.
With several proposals to expand the credit moving through the Legislature, this report can help inform the debate over how to build on the credit in coming years. Specifically, the FTB report shows that: To arrive at these estimates, the FTB tallied the number of tax filers, spouses, and dependents listed on thetax returns that received the CalEITC in tax year These returns included aroundtax filers and their spouses, as well as more thandependents.
However, people with qualifying children received much larger credits, on average: Many, if not most, of the families who benefited from the CalEITC also likely benefited from other tax credits as well, including the federal EITC and federal child Low income working families credit.
Before filing their taxes, nearly three-quarters 74 percent of the roughlypeople who benefited from the CalEITC in tax year had incomes reported for tax purposes below one-half of the official federal poverty line FPL. In other words, these two tax credits in combination cut the share of these individuals living in deep poverty by 31 percentage points.
Viewed another way, the FTB estimates that aroundpeople who claimed the CalEITC were living in deep poverty before filing their taxes, and thatof these individuals were lifted out of deep poverty by the state and federal EITCpeople remained in deep poverty.
It is important to note a key limitation of this analysis. The Census Bureau bases its official poverty calculations on more than a dozen sources of incomebut the FTB only had access to the income sources reported on state and federal tax returns.
A forthcoming Budget Center analysis will build on these findings in the FTB report by using Census data to estimate how many more Californians could be lifted out of deep poverty by the CalEITC if proposals to expand the credit are implemented.
While the FTB report helps answer important questions about the CalEITC that will be useful in debates over how to build on the credit, one of the most significant questions remains unanswered: How many eligible Californians missed out on the credit in its first year?
Answering this requires knowing how many people are eligible for the credit. Indeed, our survey suggests that many eligible workers missed out on the credit in its first year because they did not file their taxes. And in testimony at a recent Senate budget hearingFTB representatives said they believe the CalEITC is undersubscribed, with perhaps aroundfamilies missing out.
Our recent report outlined a number of strategies the state could pursue to raise awareness of the CalEITC, including by extending state support for community-based efforts to promote the credit through a grant program created last year. California could then contact these nonfilers directly to let them know that they might be eligible for a tax refund and connect them to free tax preparation services to facilitate their filing.
It also would provide an ideal opportunity for researchers to study which modes of contacting nonfilers work best to increase the use of tax credits, providing valuable insights that would inform future outreach efforts.
As state policymakers consider proposals to expand the CalEITC, they should also explore strategies for boosting participation in the credit so that as many low-earning workers as possible can reap its potentially wide-ranging benefits.The vast majority of low-income parents today are working but still struggling to make ends meet: struggling to find and keep a toehold in a changing labor market, to keep up with their bills, to pay the spiraling costs of essentials like health care and housing, and to raise children with a .
The second point is that the work-based safety net is an effective way to boost the income of working families with children that would be poor without the work supports.
In , there were 36 million working-age (25 to 55), able-bodied adults in the United States whose low wages or insecure attachment to a job in combination with their family responsibilities put them in a low-income household.
By low-income we mean a household in the bottom third of the income distribution. The vast majority of low-income parents are working but still struggling to make ends meet. This fact sheet shows how low-income working families have much in common with other American families as they seek to balance work and family life, yet face much greater risk and vulnerability than their higher-income counterparts.
Of those living in low-income households, half, or 22 percent, are living in poor households. Low-income is considered percent of the federal poverty level, and poor is defined as percent. Many middle-class Americans are dropping below the low-income threshold — roughly $45, for a family of four — because of pay cuts, a forced reduction of work hours or a spouse losing a job.