Second Golden State stimulus check: how much do dependants and undocumented workers get?
California will use its massive budget surplus to provide more direct payments and economic relief for Californians, but who is entitled to a payment?
On Wednesday, 1 September the California Franchise Tax Board (CFTB) began distributing stimulus checks as part of Gov. Gavin Newsom’s California Comeback Plan. Back in May Newsom passed the state-wide relief package which aimed to provide fresh impetus to the state’s economic recovery.
One of the key features of the bill was a new round of stimulus checks that will be sent to around two-thirds of all Californians. All taxpayers who make up to $75,000 annually will be sent a direct payment worth $600, provided they did not receive the recent Golden State Stimulus check.
In addition to that families with tax dependents will receive an additional $500 direct payment, regardless of how many dependents they claim. Undocumented workers will also get a further $500 on top of their stimulus check entitlement, because they were missed out of previous rounds of the federal payments.
How many Californians will receive the Golden State stimulus check?
The massive expansion of the Golden State stimulus checks will see roughly 9.4 million taxpayers entitled to receive the direct payments. This group is largely comprised of those who earnt between $30,000 and $75,000 in 2020, and is slated to cost the state around $5.6 billion.
Taxpayers who claimed dependents on their most recent tax return will also be in line to receive the additional $500 payments, bringing their maximum entitlement up to $1,100. It is thought that roughly 4.3 million people are included in this group, meaning that the total cost will be around $2.2 billion.
Gov. Newsom was also eager to ensure that children of undocumented workers were not excluded from the vital state-wide support and eligibility has been widened to include an estimated 520,000 taxpayers who usually file with an Individual Taxpayer Identification Number (ITIN). The ITIN is similar to the Social Security Number (SSN) and is used by those not eligible for a SSN to comply with tax laws.
Why is another round of stimulus checks being sent out?
The California Comeback Plan is a direct consequence of the state’s record-breaking budget surplus on the previous year. Earlier this year Gov. Newsom announced that the state had achieved a budgetary surplus of $73.7 billion due to increased tax revenues and a stock market surge.
After suffering from the pandemic’s lockdown orders and business closures, Newsom pledged to use the money to boost the state’s post-pandemic recovery but not all are convinced that the additional direct payments is an effective use of resources.
However James Hamilton, a professor of economics at UCSD, said that the temptation to overspend is a danger: “There are times when more fiscal stimulus is what the economy needs, but this isn’t one of them.”
He added: “I think inflation and supply shortages will turn out to be the big economic story for 2021. I would encourage the governor to focus on trying to stop the exodus of high-paying jobs from California.”
A lot has changed for Newsom since the package was signed into law in May and he is now facing the threat of recall and being removed from office. With this in mind, he will hope that the upcoming distribution of millions of direct payments will help to swing Californians in his favour and allow him to stay in office.