Child Tax Credit: California’s Poverty Rate Decreases, Solely Because of COVID Relief Fundings

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Recent data reveals that the COVID epidemic saw a decline in poverty in California, primarily attributable to state and federal safety net initiatives, particularly the extension of government child tax credits. However, a filing deadline for all those tax credits ends on November 17, triggering warnings from California campaigners and a few state lawmakers.

Brett Fischer’s Recent Analysis

As per Brett Fischer, co-author of the California Policy Lab’s most recent analysis, the nonprofit organization estimates that roughly 290,000 California kids living in or close to poverty could miss out on the child tax benefit in 2021, leaving $928 million on the table. This is because 37% of those who become qualified under the 2021 criteria, primarily those with low or no incomes, may not be aware that they must file federal tax forms to get credit.

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Decrease In Poverty Rate

Contrary to popular belief, California’s poverty rate decreased from 16.4% in 2019 to a predicted 11.7% in fall 2021, as per data by the Stanford Center on Poverty & Inequality and the nonpartisan Public Policy Institute of California. They employ the California Poverty Measure, which accounts for the high cost of housing in this state, as well as other government-funded antipoverty initiatives and payments.

According to this metric, 4.5 million people in California suffer from poverty, estimated to be $36,900 per year for a family of four. The poverty rate reported by the federal government often accounts for wages earned by an individual. According to that metric, the proportion of Californians who earned $36,900 or below for a 4-person family increased between 10.5% in 2018 and 11.6% in 2021.

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Analysts believe that the extension of food assistance, power bill assistance, rental assistance, and state unemployment insurance all contributed to preventing a worsening of the crisis. Gov. Gavin Newsom’s spokeswoman attributed a large portion of California’s improved poverty statistics to state spending, including the $18.5 billion the government gave citizens in direct subsidies, $8 billion in housing assistance, and $2.8 billion in aid with past-due utility bills reports The Motley Fool.

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