Californians are self-employed for different reasons – because they want to be, because they can’t find other work or because of family circumstances.
My mom worked a 9-to-5 job most of her life, but when my father, a disabled Vietnam Veteran, became unable to work and his drug and alcohol addiction stemming from post-traumatic stress disorder made him a danger, she made the tough decision to work from home so she could keep an eye on him.
She started out as a seamstress and ironing clothes and on the weekends sold things we had salvaged from junk piles at the flea market. In good times, her self-employment was barely enough to keep the lights on, the rent paid and the cupboards stocked. Too many times, it was not.
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This is why it is so disappointing to me personally, and as a Sacramento-based advocate for low-income Californians, that people like my mom have been locked out of one of the most important economic advancement tools – the Earned Income Tax Credit.
Two years ago, Gov. Jerry Brown and the Legislature reached a budget deal that established California’s first EITC, joining 25 other states at the time and the District of Columbia that also provide a state credit to supplement the federal credit. But unlike those states and the federal EITC, California chose to exclude self-employed workers. We are the only state to do this.
Finally, on Thursday, the Legislature’s budget-writing committee passed a spending plan that expands the credit to the self-employed and raises the income threshold to $22,360, helping an additional 134,000 low-income households. Tuesday, Gov. Brown and Democratic leaders signed off on the plan as well.
My mom filed her taxes each year. She used the credit she received through the federal EITC to pay for her self-employment taxes. And it was a good thing she did. Like too many Americans who spend significant periods of their lives in poverty and without health care, she died much too young. The EITC not only helped my mom but also supported me in becoming the first in my family to earn a four-year college degree.
When my family became homeless during my first year of college, I suggested that maybe I should come back to Auburn to help pay bills. My mom told me I couldn’t because she couldn’t receive the EITC if I was no longer in college. This is because the EITC counts dependent children, including those up to age 24 while they are in college. I now know that it was less than $3,000 per year and that she was exaggerating the help it gave her, but I can honestly say that the EITC contributed to my decision to stay in college rather than to return home to help my parents, who ended up living in their truck camper for nearly a year.
Life under the poverty line is hard for anyone. Life under the poverty line while self-employed is more difficult because of income is precarious. The EITC can help.
Jessica Bartholow is chairwoman of the California Asset Building Coalition and a policy advocate at the Western Center on Law and Poverty. She can be contacted at firstname.lastname@example.org.