California is closer than ever to giving a tax break to undocumented immigrants. Here’s why
Will tax breaks for undocumented families and Medi-Cal coverage for undocumented seniors make it into the California’s final budget this year? Lawmakers and advocates are watching closely.
In order to meet a Monday deadline or risk losing their salary, California lawmakers sent Gov. Gavin Newsom an unfinished spending plan that includes both proposals. Newsom will have until June 30 to sign or veto a budget, and negotiations continue.
The proposed tax breaks would go to those with Individual Taxpayer Identification Numbers with a child, ages 6 or under. They include the California Earned Income Tax Credit and the Young Child Tax Credit. Expanding the earned income tax credit to the undocumented would cost $65 million, according to the state Legislative Analyst, as the state seeks to close what the governor has estimated to be a $54 billion spending gap.
Advocates argue that the money is needed to help a population that already contributes a significant share of take revenue. A report from the California Budget and Policy Center notes that undocumented immigrants pay $3.2 billion in state and local taxes yearly in California. About $157.9 million of that is personal income tax.
“These tax credits can be essential and invaluable to making ends meet,” said Mike Herald, policy advocacy director at the Western Center on Law & Poverty. “These have real impacts on people, and they really do reduce poverty among families.”
Former Gov. Jerry Brown created the California Earned Income Tax Credit in 2015 to help low-income families.
Currently, in order to qualify for the credit, you must be at least 18 years old, make no more than $30,000 a year and have a Social Security number. Undocumented immigrants without Social Security Numbers use Individual Taxpayer Identification Numbers to pay federal taxes.
The Young Child Tax Credit was introduced in tax year 2019 and began its implementation this year. To qualify for the child tax credit, you must be at least 18 years old, have a child under the age of six, make less than $30,000 a year and have a Social Security number.
Currently, a head of household with two children under six making $12,000 a year or less can earn $1,240 through the California Earned Income Tax Credit and $1,000 with the Young Child Tax Credit, according to a tax calculator.
ITIN filers with children under the age of six make up an estimated 13% of ITIN holders, Herald said.
California noncitizens have been among the hardest hit by COVID-19’s unemployment toll. Coronavirus pandemic-related job losses have affected nearly 23.9% of noncitizens in California between February and April, according to a report by the University of California, Merced. California women who are not citizens have experienced a disproportionate rate of job loss, with more than 1 in 3 losing their jobs.
Five years ago, Herald said, advocacy for undocumented immigrants in the state budget was not supported by Republicans or Democrats. But now, years of advocacy for immigrant communities are beginning to bear fruit, he said.
“I think it’s really important to recognize how far we’ve been able to come at the state level, because a few years ago these bills were not being introduced. They would not be taken seriously,” Herald said.
California Democrats proposed tax breaks in 2018 and 2019, but they were not included in the budgets they sent to the governor.
Linda Nguy, a policy analyst at the Western Center on Law & Poverty, said advocates also are still pushing to expand health care for undocumented immigrants during the pandemic.
Last year, expanding Medi-Cal for undocumented children and young adults, under the age of 26, was included in the state budget. The coverage for children and young adults began January 2020.
California Gov. Gavin Newsom included the Medi-Cal expansion to seniors, ages 65 and over, regardless of immigration status in his January 2020 budget plan, but it was later excluded from his revised plan released in May as the state budget faced a $54 billion deficit due to the coronavirus pandemic.
“I would say a lot of the administration’s cuts were targeted in the arena of health,” Nguy said. “At public health crisis times, these cuts don’t make sense ... and may exacerbate existing impacts that ... COVID-19 has had on certain communities.”
Under the Democrats’ plan, the Medi-Cal expansion’s start date would not begin until January 2022, and the governor would have the authority to delay its launch based on the state’s ability to afford the cost.
California State Assemblywoman Lorena Gonzalez, D-San Diego, said in a statement she was proud to cast a vote for a budget that “looks out for immigrant families” who were left out of federal coronavirus aid.
“Our historic expansion of the California Earned Income Tax Credit to all eligible families with children younger than six, including undocumented residents, will help provide much needed relief to working families across the state,” she said.
Assemblyman Joaquin Arambula, D-Fresno, said he was honored to send the governor a budget plan that includes medical coverage to eligible seniors regardless of immigration status.
“I’m hopeful,” Arambula said, “That the governor will want to honor the commitment he made at the start of the year.”
During the pandemic, he said, “the health of each of us is dependent on the health of all of us.”
This story was originally published June 17, 2020 at 5:00 AM.