Kirk J. Stark (UCLA) testifies today at a hearing of the California Assembly Human Services Committee on proposed legislation (AB 1078) that would adopt the Earned Income Tax Credit in California.  The genesis of the legislation is Kirk’s article, Should California Adopt an Earned Income Tax Credit?:

As of August 2005, nineteen states had adopted EITCs based on the federal credit. To date, however, the country’s largest state, California, has refused to adopt a state-level EITC. In this article, I consider the arguments for a California EITC and examine an alternative policy option that has not yet been discussed in the literature – namely, that a state income transfer program may be designed not only to supplement the federal EITC, but also to exploit and take maximum advantage of the benefits provided by the federal program. This can be done through the adoption of state policies that increase the earned income of EITC recipients whose income falls within the phase-in range of the federal credit. Rather than just supplementing the federal credit, the idea would be to maximize the amount of federal EITC dollars flowing into the state by ensuring that each potential EITC beneficiary earns an amount of income equal to or greater than the “plateau” range within the federal EITC structure. A properly designed state program – i.e., one that takes account of the nuance and detail of federal tax law – can target state resources at those with the lowest levels of household income, while maximizing tax benefits available under federal law.