The California state budget could extend a tax break to low-income families of undocumented immigrants.
Assembly Democrats want Gov. Jerry Brown to expand the state’s Earned Income Tax Credit in such a way that people who do not have Social Security numbers can apply for it.
The proposal is meant to help poor Californians recover some of their state income tax. Last year, a household with two children and an adjusted gross income of up to $22,309 would have been eligible for a tax credit. The maximum credit for a family of that size is $2,467, according to the Franchise Tax Board.
The Assembly plan would expand eligibility to people with Individual Taxpayer Identification Numbers. They're tax-processing numbers the IRS uses to collect tax from people who do not have Social Security numbers.
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Undocumented workers are required to pay tax. In 2015, people with Individual Taxpayer Identification Numbers paid $23.6 billion in federal income tax.
Brown signed a law creating the state Earned Income Tax Credit in 2015, aiming to put more money in the pockets of low-income families. This year, 1.3 million households benefited from it, receiving about $299 million in credits based on their 2017 earnings, according to the Franchise Tax Board.
Now, with government revenue rising, advocacy groups and some Democratic leaders want to further expand eligibility for the credit.
The budget proposal Brown released last month included money to expand eligibility to young workers and to seniors.
Assembly Democrats want to go further, opening the program to people with the Taxpayer Identification Numbers. Advocates say the expansion would help immigrant parents whose children are U.S. citizens.
"We believe all working Californians, including immigrants, should be able to afford life's basic needs — food, housing, health care and transportation," said Josh Fryday, president of CalEITC4Me, an organization that raises awareness about the tax credit.
Lawmakers are sorting out the differences this week in the Joint Legislative Budget Committee. The Franchise Tax Board estimates that extending eligibility to undocumented families could cost $70 million; Assembly leaders estimate it would cost about $40 million.
“Now is the time to expand CalEITC and make it inclusive and equitable for all working families,” Assemblywoman Eloise Gomez Reyes, D-San Bernardino, said at a hearing last month for Assembly Bill 2066, which extends the credit to people with the Taxpayer Identification Numbers.
A long list of immigrant and social service advocacy groups support the effort. It could help more than 112,000 immigrant households in the state, according to the California Immigrant Policy Center. Assemblyman Mark Stone, D-Scotts Valley, sponsored the bill that Democrats included in their budget proposal.
“Inclusion is really important for the state of California, and when we lock out Californians based on immigration status, it not only sets back families and communities but it really hurts our state,” Gina Da Silva, government affairs director for the California Immigrant Policy Center, said at the May hearing.
No organization is on record as opposing the expansion, although Republican Assemblywoman Melissa Melendez of Lake Elsinore voted against it a committee hearing.
The Franchise Tax Board in an analysis said extending the credit to households with the Taxpayer Identification Numbers could create a number of problems, such as:
- Generating an increase in fraudulent claims and improper payments
- Creating conflicts with requirements for the federal Earned Income Tax Credit
- Increasing the likelihood of improper payments because the Franchise Tax Board will have trouble verifying wages with employers
- Compelling the board to spend money remaking tax forms
The Joint Budget Committee could vote on the proposal this week.
This story was updated at 10 a.m. on Friday, June 8 to correct the amount of federal income tax paid by households with Individual Taxpayer Identification Numbers in 2015.