California has the highest poverty rate in America when factoring in the cost of living. Texas has the tenth-highest
California’s poverty rate is high despite heavy investment to counter it. It has 38% more people, but its spending on public welfare is 120% higher than Texas’s. However, the cost of living in California is 40% higher than the national average, whereas in Texas it is around 9% below the average. Housing is the primary culprit, responsible for around 80% of the higher cost of living in California. Around one in three Californian renters spends at least half their income on rent.
A second way the states differ in their treatment of the poor is in their approach to redistribution through taxation and wages. California’s progressive tax regime, with a high personal-income tax on the wealthy, leans heavily on the rich. California also offers a state-level earned-income tax credit, which in 2018 gave around $400m to poor people who are working but fall below a certain threshold.
Which state’s approach better serves citizens? Neither is helping all the people who need it. Poverty anywhere can feel hopeless, but in Texas it can be especially bleak. In parts of the Rio Grande Valley in southern Texas, one of the country’s poorest regions, more than 40% of children live in poverty.
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