San Francisco Mayor Gavin Newsom had a problem. He was looking at statistics that were anything but upbeat - unemployment since 2000 had more than doubled in the city, and many low-income workers - some working more than one job - weren’t applying for the federal Earned Income Tax Credit (EITC), a tax refund designed to supplement their low earnings. This meant that San Francisco’s low-income workers were leaving an estimated $10.54 million a year unclaimed - money that could provide them with a better life in the city, and provide business for the local economy as the money was spent. Gavin could have thrown up his hands and moved on to other challenges the city faces, but he didn’t. Taking an approach to the EITC that other cities have embraced, including Chicago’s six year-old EITC program under Mayor Richard M. Daley, Mayor Newsom decided he could do better for his city by developing a public-private partnership to help low-income workers. With The Working Families Credit Newsom is doing better for the city - much better - by leveraging EITC, one of the most successful anti-poverty programs in American history and increasing its impact with local dollars and efforts.
San Francisco’s creative and smart approach to economic development helps low-income working families by uniting government, non-profit and business efforts, while providing local economic growth. Gavin has partnered with the local business community and charitable groups, in addition to a business leader that is providing substantial money and services for the project.
The program has three basic parts:
1. Encourage low-income working people to apply for the federal Earned Income Tax Credit (EITC) and other tax credits they are entitled to (state and national);
3. Provide a system of free tax preparation.
Additional efforts by partners include offering free checking and savings accounts, free financial education opportunities and even some free financial counseling.
Underlying the entire enterprise is the recognition that communication is key to success. The program stresses this with everything from individual attention (e.g. providing brochures and applications in three languages) to publicizing and encouraging the effort through businesses (from grocery stores to tax preparation offices to banks), non-profits and throughout city government. Wells Fargo, one of the business partners, even has an “eBus” that travels to locations to offer financial information.
What DuPage County Can Learn From San Francisco
DuPage County is a relatively wealthy area - so why should people there care about what San Francisco is doing to help alleviate poverty for low-income workers? Despite our relatively low poverty rate, in tax year 2002 EITC returns for DuPage County were over $39 million, with relatively affluent Naperville accounting for close to $3 million. DuPage County in tax year 2002 had over 26,000 taxpayers claiming the EITC, an increase of about 1,000 since tax year 2000, with likely close to 4,000 more that qualify, but don’t receive the credit. With an average (in tax year 2002) of $1,487 per DuPage return, our community’s low-income workers are losing almost $6 million that could help them make ends meet, and could also help out our local economy.
Imagine the effect of a public-private partnership that lived up to the high standards we set for DuPage. Imagine leveraging $1-2 million a year in DuPage tax dollars to get double that (from matching business and private contributions) to help low-income working people make ends meet in DuPage with a “DuPage Works Credit” that matched a percentage of the federal EITC. Imagine pushing education and services to get more people claiming the almost $6 million a year our community members, and our communities, are losing. It would be a smart use of money, stretching dollars that would give low-income workers credit for their work - while providing an annual boost to the local economy of as much as $10 million. Developing a program like this takes vision and the will to solve problems - something DuPage residents should expect from their elected representatives. It’s about dollars and social sense.
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