Bill Text: CA AB43 | 2015-2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Personal income taxes: credit: earned income.

Spectrum: Partisan Bill (Democrat 21-0)

Status: (Failed) 2016-11-30 - From Senate committee without further action. [AB43 Detail]

Download: California-2015-AB43-Introduced.html

INTRODUCED BY   Assembly Member Mark Stone

                        DECEMBER 1, 2014

   An act relating to taxation.


   AB 43, as introduced, Mark Stone. Personal income tax: credit:
earned income.
   The Personal Income Tax Law authorizes various credits against the
taxes imposed by that law. The federal Internal Revenue Code
authorizes a refundable earned income tax credit for certain
low-income individuals who have earned income and who meet certain
other requirements.
   This bill would state the intent of the Legislature to enact
legislation that would create an refundable earned income tax credit
for low-income individuals working in California. The bill would also
make findings and declarations in this regard.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


  SECTION 1.  (a) The Legislature finds and declares all of the
   (1) In its Supplemental Poverty Measure report for the year 2013,
released in October 2014, the United States Census Bureau reported
California's rate of poverty to be 23.4 percent. This rate is the
highest among all 50 states.
   (2) Using census data released in September 2014, the California
Budget Project (CBP) reported that the economic recovery from the
Great Recession has largely bypassed low-and middle-income
Californians, with the bottom three-fifths of the income distribution
experiencing stagnating income gains. This is contrasted with the
top one-fifth of the income distribution experiencing gains of 52.4
   (3) A briefing on poverty released by the CBP in August 2014
reports that 67 percent of families living in poverty were supported
by one or more workers in 2012. Given that the majority of families
living in poverty are working families in California, it is evident
that poverty largely reflects low-paying jobs, not the absence of
   (4) In California, the Public Policy Institute of California
(PPIC), in collaboration with the Stanford Center on Poverty and
Inequality, has developed the California Poverty Measure (CPM), which
underscores the role of California's social safety net, amount which
includes the CalFresh Program, CalWORKs, and the federal Earned
Income Tax Credit (EITC), in mitigating poverty.
   (5) Using data from 2011, a PPIC report on the CPM released in
October 2013, reveals that 22 percent of Californians, 8.1 million
people, lived in poverty. A comparison of CPM rates by county show
that the three most populous counties, Los Angeles County, San Diego
County, and Orange County, all had rates above the statewide CPM at
26.9 percent, 22.7 percent, and 24.3 percent, respectively.
   (6) The CPM rate for children statewide for children, those under
the age of 18, was 25.1 percent, the highest rate of any age group.
This amounts to 2.3 million of California's children living in
   (7) Without need-based safety net programs and resources, over 30
percent of Californians would be living in poverty. The absence of
the safety net would increase the poverty rate among California's
children to 39 percent according to the CPM.
   (8) Refundable tax credits, including the federal EITC, reduced
the poverty rate in California by 3.2 percent overall. Among
children, the poverty rate reduction was 6 percent. This means that
560,000 fewer children and 600,000 fewer working-age adults, 1.16
million people fewer in total, are living in poverty when refundable
tax credits are accounted for in the CPM.
   (9) According to the National Conference of State Legislatures, 25
states in the country and the District of Columbia, provide an EITC
in addition to the federal EITC. California does not currently have a
state EITC.
   (10) A Brookings Institution report issued in January 2003, shows
that in addition to boosting the family incomes of families in
poverty, state EITC refunds served as an important economic stimulus
for the communities and regions of the families by magnifying the
impact of the federal EITC overall.
   (b) Based on these findings and declarations, it is the intent of
the Legislature to enact legislation that would create an refundable
earned income tax credit for low-income individuals working in