Low-Income Californians Have Received $1 Billion in Tax Credits, Newsom Says

July 30, 2020 Updated: August 8, 2020

Gov. Gavin Newsom announced July 29 that tax credits had successfully provided needed economic relief to low-income Californians hit hard by the COVID-19 pandemic, and said a scheduled hike to the state’s minimum wage would be implemented as planned to help workers.

Newsom announced in a press release that the California Earned Income Tax Credit (CalEITC) and Young Child Tax Credit programs have already put $1 billion back into the pockets of over 3.6 million California families, at a time when the financial relief is sorely needed.

“The CalEITC is providing critical relief for millions of low-income Californians and their families, many of whom were struggling before the COVID-19 pandemic and have been hit especially hard during this time. The CalEITC and the new Young Child Tax Credit are helping families make ends meet,” Newsom said.

Newsom expanded the cash-back program in June 2019 to include Californians with incomes up to $30,000 dollars per year. Eligible families with children under the age of six can receive additional relief by claiming the Young Child Tax Credit.

Newsom also announced that his initiative to raise the state minimum wage to $14 an hour starting in 2021 would continue as planned, despite the recession caused by COVID-19.

“As we continue our efforts to slow the spread of COVID-19, we must also ensure that as our economy recovers, all Californians can benefit in its growth,” Newsom said in the press release.

Newsom had the authority to suspend the scheduled increase in minimum wage given the state’s struggling economy, but made the decision to move forward with it. The minimum wage is set to raise on Jan. 1, 2021, to $14 per hour for businesses with more than 25 employees and $13 per hour for those with 25 or fewer.

Newsom’s decision to raise the wage has met with backlash from some business owners.

John Kabateck, California director for the National Federation of Independent Business (NFIB), said that Newsom is failing to acknowledge the burden these increases place on small business owners.

“We have an official economic policy in California, and it’s to completely annihilate small businesses,” Kabateck said in a July 29 press release. The release said that everything the governor and Legislature have done has been for the employee and nothing for the people who have to bring in the money to pay the employee, according to Kabateck.

Small businesses don’t have the state government in their corner, Kabateck said. He questioned whether Newsom “even cares about small businesses.”

Newsom said the increase in minimum wage will offer more relief to those who have been working on the front lines of the COVID-19 pandemic, including child care workers, hospital and nursing facility staff, and grocery store workers.

“Not allowing this increase to go forward will only make life harder for those Californians who have already borne a disproportionate share of the economic hardship caused by this pandemic,” said Newsom.