Posted: | June 13, 2023 12:00 PM |
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From: | Senator Katie J. Muth |
To: | All Senate members |
Subject: | The Working Families Tax Credit for Pennsylvania |
In the near future, I will be introducing companion legislation to House Bill 1034 introduced by Representative Sara Innamorato to create the Working Families Tax Credit for Pennsylvania. For decades, working families across Pennsylvania have watched the cost of living rise beyond their means while their wages have stagnated. The COVID-19 pandemic destroyed many working-class families' household savings and left many of these hardworking people asking for help for the first time. Simultaneously, corporations touted record profits, and Pennsylvania's wealthiest residents added $4.3 billion to their wealth, according to a report by Americans for Tax Fairness (ATF), Health Care for America Now (HCAN), and the Pennsylvania Budget and Policy Center. To help curb this ever-widening inequality, reduce the number of children in poverty, and provide a safeguard for working families, this bill would create the Working Families Tax Credit for Pennsylvania. Inspired by the federal Earned Income Tax Credit (EITC), this legislation would directly help lift the financial well-being of working families by putting more money into the hands of low-to-moderate-income working Pennsylvanians. Implementing a program in Pennsylvania will bring us up to date with the 28 other states and the District of Columbia who currently have state-level earned income tax credits, and the three states that will have programs starting in 2023. State-level EITC programs have proven effective at reducing poverty and providing targeted economic stimulus to aid those states' COVID-19 recoveries. When states offer this program, the increase in purchasing power of working families creates a noticeable, positive impact on local economies. When taxpayers who receive the EITC spend their additional income on necessities, often purchased in their communities, supporting local businesses and jobs. Studies on the impact of the state EITCs find that they cost less than other tax credits states consider while offering more targeted economic stimulus to local communities. A Working Families Tax Credit would not only assist Pennsylvania's economic recovery but make a real impact toward alleviating hardships for those living paycheck to paycheck. In 2018, well before the COVID-19 pandemic hit, 39% of Pennsylvanians did not have enough income to cover the minimal cost of the five basic household necessities: housing, child care, food, transportation, and health care, according to the United Way's Asset Limited Income Challenged Employed (ALICE) report. The ALICE population earns above the Federal Poverty Level but makes less than needed to afford essentials. Despite the lack of means for the ALICE population, they also often earn just enough to be disqualified from any form of government assistance. Despite hardships for the ALICE population, they are better situated than those who work full-time and remain inside the Federal Poverty Level. This legislation would have a direct and immediate impact, not only to begin reviving an evaporating middle-class but also ensuring the elevation of workers from below the Federal Poverty Line into the ALICE population. The ALICE report estimates that raising all Pennsylvanians to the ALICE threshold would add an estimated $130.2 Billion per year to Pennsylvania's GDP, including $5.1 billion in tax revenue. The Working Families Tax Credit is an essential step in helping people, families, and communities across Pennsylvania thrive. Please join me in fighting for working families by co-sponsoring this legislation. |
Introduced as SB810