Low-income Californians struggle to buy food. Here’s what advocates want lawmakers to do
Six out of every 10 Californians with incomes below $35,000 struggled to pay for food, housing, medication and other basic necessities between March and July of this year, according to a report released Tuesday by the California Budget and Policy Center.
Analysts with the nonprofit research center say there’s a way to address this problem: higher taxes on corporations.
“All Californians should be able to put food on the table, keep themselves and their families safely housed, and thrive in their communities,” wrote Hannah Orbach-Mandel, a state policy fellow at the center. “However, high costs of living, inflation, and the end of (state and federal) pandemic-era supports ... put a strain on the ability of Californians to make ends meet.”
To determine how Californians are faring, Orbach-Mandel analyzed data collected in the U.S. Census Bureau’s Household Pulse Survey. She found that certain people of color and households with children were more likely to face challenges meeting basic needs.
“Past racist policies and ongoing discrimination have made Californians of color more likely to have low incomes,” Orbach-Mandel said. “For example, more than half (54%) of Black Californians reported facing difficulty paying for essential needs like food and housing. Additionally, LGBTQ+ individuals in the state disproportionately struggle to afford basic expenses.”
Nearly half of all California households with children struggled to pay for basic expenses between March and mid-July, compared with 35% of households that had no children, Orbach-Mandel found, and when there were children in a household where the income fell below $35,000, 71% of the families didn’t have enough money to cover all necessities.
While inflation played a key role in elevating the cost of living, Orbach-Mandel said, families also suffered the loss of some critical safety-net support from the federal and state government. For instance, she said, the federal government had allocated emergency funds to food programs.
In January alone, this allotment meant that CalFresh received an additional $521 million to give families to buy groceries, the budget center reported in May. Senior policy analyst Monica Saucedo noted that this was a 40% increase in total funding for the month, and to families, it equaled a boost of $95 to $258 in benefits.
The California Budget and Policy Center urged lawmakers to alleviate the strain on the state’s lowest-paid workers.
To get funding for safety-net programs that will help, the budget center has recommended policymakers increase taxes on corporations, noting that companies are paying roughly half as much of their profit in state taxes as they did four decades ago.
Here’s how legislators can obtain more tax revenue from corporations, wrote Kayla Kitson, another senior policy analyst at the budget center:
▪ Raise tax rates on the state’s most profitable corporations.
▪ Ensure corporations pay an adequate minimum level of state taxes. “State law still allows corporations to use many tax credits to reduce the minimum tax they would owe under these rules,” Kitson wrote. “This includes the research and development credit — the state’s largest credit, representing about 4 in 5 dollars of the total cost of California’s corporate tax credits. As a result, California does not actually ensure that profitable corporations pay an adequate minimum level of tax.”
▪ Limit corporations’ ability to use tax havens to avoid paying taxes.
This proposal will surely meet opposition from industry, however. Loren Kaye, president of the California Foundation for Commerce and Education, said that California has a relatively high corporate tax rate at 8.84%.
“It’s in the top quartile of all states,” he said. “The only justification for raising that rate higher would be, as the bank robber Willie Sutton was purported to have said, that’s where the money is - and corporations don’t vote.”
Corporations are in no way gaming the system by using tax credits to reduce their tax liabilities, Kaye said
“They wouldn’t need to use the tax credits if the taxes weren’t so high already,” he said. “But more to the point, those relatively few tax credits in the corporate tax code are there for reasons of public policy. Past legislatures have recognized time and again that providing an incentive to do R&D in California fosters innovation, grows new industries from birth, and incidentally helps support and strengthen our public and private universities.”
If California didn’t have those tax credits, within a highly competitive national and international economy, Kaye said, lawmakers would have to fund other public policies to offset the cost of doing business here.
Corporate profits have surged to historic new highs in recent years, the budget center analysts said, but these companies are not adequately contributing to support the services that benefit all Californians.
