California wants to give poorer people more money in their state tax refunds and make more households eligible for income tax credit, but will have to adopt some of Trump’s 2017 tax law in order to pay for it.
State lawmakers have sent a $214.8 billion operating budget to Democratic governor Gavin Newsom’s desk, but have not yet adopted the tax changes to pay for the expansion of the state’s earned income tax credit.
Some legislators have critiqued the adoption of portions of a law that is generally hated by Californians, but Newsom’s plan would not adopt all of the federal government’s changes. However, the changes would generate an additional $1.8 billion for the state to expand its income tax credit.
California lawmakers have expressed concern about what exactly the proposal entails, especially for small businesses. Not approving the tax changes could create problems such as no funding for the tax credit and a reformulation of public school funding.