Some seniors and people with disabilities will be cut off from new California state payments

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The bank accounts of some 23 million Californians will get a boost from $200 to $1,050, thanks to a new round of payments approved by state lawmakers.

But the payments, aimed at mitigating rising prices for gas and other goods, will leave out many low-income Californians. Among those who have died are the elderly, many living on disability benefits, and some low-income adults.

Indeed, direct deposits and debit cards – which should start arriving at the end of October and end in January 2023 – will be sent on the basis of tax returns.

About 3 million Californians are part of families that earn enough to avoid having to file taxes, according to a study by the Public Policy Institute of California for its California Poverty Measure 2019. The rate of poverty among people who live in families who do not need to file taxes is 60%, the institute estimates. Neither the state Department of Finance nor the Franchise Tax Board, which is responsible for collecting personal income tax in California, knew exactly how many Californians would be excluded from the rebate.

Tying payments to taxes sounds like a Catch-22 to San Diego retiree Kerry Weber. He and his wife live on Social Security retirement benefits, a “tiny” pension and some veterans’ disability benefits. That’s “a lot less” for the two of them, he says, than a joint income of about $51,000 above which they’d have to pay taxes — so they don’t file a return.

But Weber felt inflation reduce his fixed income. Rising gas prices have made car trips to San Francisco and Tahoe to visit his children more expensive, and the lumber he bought to build a table for his granddaughter is now much more expensive. .

“They say, ‘Look mate, you’re not making enough money for you and your wife to have to file taxes,'” Weber said. “‘That’s great, I agree with you 100%,’ ‘Oh, by the way, you’re not getting any stimulus,'” Weber said. “‘What?'”

Why does this happen?

The Legislative Assembly wanted to create a program to send payments to people who do not file taxes and are not enrolled in safety net programs that received a boost in the budget. But after negotiations with the Newsom administration, this proposal was not retained in the final budget.

Finance Department spokesman HD Palmer said he could not elaborate on why the proposal was not included in the final budget, but the proposals from both sides did not. were not included in the compromise.

Representatives for Senate Speaker Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon said no one could figure out how to administer those payments.

“Ultimately, the reimbursement setup was the subject of tripartite negotiations as part of the final budget, and there was concern that there was no effective and secure way to implement a subsidy program for non-filers,” said a statement from the office of Atkins, a San Diego Democrat.

The Legislature “really wanted to get help for these people, but … we weren’t able to do that logistically,” said a spokesperson for Rendon, a Democrat from South Gate.

Who is in and who is out?

Payments will be made to Californians who have filed 2020 tax returns by October 2021, according to the Franchise Tax Board, which has a tool to calculate how much you’re eligible for based on your income and other factors. .

But in California, people earning less than $19,310 who don’t have children or someone else to support them — one of several different gross income thresholds — aren’t required to file taxes. on income. The state also does not consider Social Security retirement or disability benefits to be taxable income, which means that people who receive these benefits are not required to pay taxes, as long as they have a minimal other income.

Lawmakers have tried to help some low-income people who can’t file taxes by increasing payments for people receiving CalWorks benefits, a program for needy families. They also increased benefits for people who receive Supplemental Security Income – a state-supplemented version of Social Security benefits for elderly or disabled people who would otherwise not qualify or have extremely high Social Security payments. weak.

The boosts for people in both programs are good, said Trinh Phan, a senior economic security lawyer at Justice in Aging, which advocates for low-income seniors. But, she said, the budget package still leaves out some very low-income people.

For example, someone who only gets by on Social Security disability insurance might miss this discount. and CalWorks and Supplemental Security Income increases: They may earn little enough that they don’t have to file taxes, but if they don’t have kids, they probably won’t qualify for CalWorks. And, if their disability benefits pay more than $1,060.21 a month, they wouldn’t qualify for Supplemental Security Income either, Phan said.

About a quarter of Americans over 65 live in households where 90% of family income comes from Social Security, according to the Social Security Administration. The average benefit for retired workers in California is about $1,500 per month, or $18,000 per year. The average SSDI benefit is around $1,300 per month, or $15,600 per year.

Some low-income Californians will not get the rebate, Treasury Department spokesman HD Palmer said. But he pointed out that many people who are not required to file taxes still choose to do so, sometimes to receive other benefits distributed through the system. In 2020, 500,000 additional low-income tax returns were filed in California, Palmer said in a statement, “likely to qualify for a Golden State Stimulus payment or maybe even a federal relief payment.” . Palmer also pointed to other forms of financial assistance in the budget, such as $1.4 billion in assistance for people with unpaid utility bills.

Still, some are unimpressed.

“It sucks,” said Brooke Hamlin, an 81-year-old woman who lives on Social Security retirement benefits in San Rafael. She said she gets by on less than $20,000 a year, supplemented by food stamps and meals on wheels. “It’s arranged so that the poorest and most needy people don’t get it,” Hamlin said.

hard to reach

People who don’t pay taxes and participate in a California-run benefits program are hard to reach quickly by the state with help. Social Security benefits are administered by the federal government and the state does not have data on recipients, said Jesse Rothstein, professor of public policy and economics at the University of California, Berkeley and director of the faculty. from the California Policy Lab.

“It’s obviously not great that we’re missing people, and a lot of them are some of the most vulnerable people in the economy,” Rothstein said. But, he said, “it’s not like there’s a mechanism available that reaches everyone.” Given an imperfect set of options, using the tax system was the best choice, Rothstein said.

It was also the choice lawmakers made when handing out two rounds of Golden State Stimulus payments in 2021. After that decision, they were criticized by disability advocates and seniors who were left behind. side.

“To see that they’ve done it again this year is more proof that no one is paying attention to the people who need help the most,” said Charis Hill, a disability advocate who lives in Sacramento.

“It’s obviously not great that we’re missing people, and a lot of them are some of the most vulnerable people in the economy.”

JESSE ROTHSTEIN, PROFESSOR OF PUBLIC POLICY AND ECONOMICS AT UC BERKELEY

The California government doesn’t know much about people who don’t file their taxes. The Franchise Tax Board does not track the number of residents who are not required to file taxes, or the share of those people who live in poverty, according to statements in response to questions from CalMatters. A spokesperson for the council said no state agency appears to be tracking this information.

The difficulty of reaching people with this payment reveals a weakness in the state system “that needs to be fixed in the longer term,” said Chris Hoene, executive director of the California Budget and Policy Center, which advocates targeting the help to reduce income -persons. Part of the solution would be better data sharing between the federal government and the states, he said.

But, given the options being considered by policymakers — including giving money to car owners, as Governor Newsom has proposed, and lowering the gas tax — he thinks rate-based payments income are a good result.

Weber, the San Diego retiree who missed both Golden State Stimulus payments and also won’t receive reimbursement this year, is frustrated.

“I feel like I’m shoveling doo-doo against the grain here,” he said.

CalMatters is a nonprofit, nonpartisan media company explaining California policies and politics.

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