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10/18/2021 11:15 PM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20210&cosponId=36240
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House of Representatives
Session of 2021 - 2022 Regular Session

MEMORANDUM

Posted: September 23, 2021 10:05 AM
From: Representative Martina A. White
To: All House members
Subject: Enactment of an Earned Income Tax Credit in Pennsylvania
 
The inability to afford basic necessities is all too common for many of the Commonwealth’s lower income, working households. The COVID-19 Pandemic only made this problem worse for many, and it is time we enact a reasonable solution that helps low-income, working families. Therefore, I am proposing that we enact an Earned Income Tax Credit in Pennsylvania.

Since 1975, the federal government has been incentivizing work through the Earned Income Tax Credit (EITC). By design, the credits are refundable, and grow with each additional dollar of earnings until they reach their maximum value. In addition, the federal EITC accounts for approximately $70 billion in tax credits to about 26 million families annually, making it the largest anti-poverty program in the United States. The average family in Pennsylvania received $2,289 through the federal EITC in 2019. Today, 29 states – California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Vermont, Virginia, Washington1 and Wisconsin – offer a tax credit against state income taxes.

For low-income, working families, referred to by the United Way of Pennsylvania as ALICE, Asset Limited, Income Constrained, Employed, a Commonwealth Earned Income Tax Credit will provide much needed assistance with affording child care, food, transportation, clothes and other household expenses. According to the UWP’s most recent ALICE Report, 2 out of 5 Pennsylvania households are struggling to make ends meet. In my district, the 170th Legislative District, which is in Philadelphia, 53% of households are ALICE, which is 14% higher than the statewide average (39%).  To help this population, we need to reward their hard work with an Earned Income Tax Credit. If Pennsylvania had an EITC program, in 2019, the average family would have received a tax credit of $229.

The benefits of an earned income tax credit are not just limited to households. The EITC also has a community impact as it is directly reinvested in local businesses. Studies show that EITC dollars provide a concentrated cash infusion to local economies– in some cities, more than $1 million per square mile. In addition, Moody’s Fiscal Multiplier Estimates indicate that for every EITC dollar a recipient earns, they return $1.24 to the economy. For the Commonwealth, this policy could resolve several issues including addressing the financial needs of families, while addressing our Commonwealth’s projected revenue shortfalls in the coming years.
 
The COVID-19 Pandemic exacerbated many problems facing our Commonwealth. Please join me in supporting the enactment of an Earned Income Tax Credit, which is a great first step towards helping low-income working families, stabilizing local economies, and generating additional revenues for the Commonwealth.
 
 I respectfully ask for your consideration to join me as a co-sponsor of this legislation.