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02/29/2024 01:07 PM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20230&cosponId=40711
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House of Representatives
Session of 2023 - 2024 Regular Session

MEMORANDUM

Posted: May 8, 2023 12:23 PM
From: Representative Christina D. Sappey
To: All House members
Subject: Creating Earned Income Tax Credits in Pennsylvania
 
The constant struggle to meet financial obligations is too common for lower income, working households in PA. The United Way of Pennsylvania (UWP) refers to these working individuals and families, living paycheck to paycheck, as ALICE, Asset Limited, Income Constrained, Employed. These workers aspire to advance in the workplace, own a home, and other markers of financial stability that enable them to direct their own lives. Therefore, I am proposing the enactment of a 25% state Earned Income Tax Credit (EITC) to help eligible working Pennsylvania households achieve their goals.
 
According to the UWP’s recently released ALICE Report, the ALICE population increased by 7% from 2019 to 2021 in Pennsylvania. For these families, a Commonwealth EITC will provide much needed assistance with the costs of child care, food, transportation, clothes and other household expenses.  If Pennsylvania had an EITC program, in 2019, the average eligible family would have received a tax credit between $197 and $594.
 
This investment in our working households will also provide a return to our Commonwealth in the form of human services savings and economic growth. Per the UWP fiscal impact report, “Implementing a State Earned Income Tax Credit (EITC) in Pennsylvania: A Benefit-Cost Analysis,” for every $1 spent on a state EITC  by the Commonwealth, Pennsylvania receives $4 back in economic growth and saves $3 dollars in social spending.
 
Since 1975, the federal government has been incentivizing work through the EITC. By design, the credits are refundable, and grow with each additional dollar of earnings until they reach their maximum value. 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. Today, 33 states offer a tax credit against state income taxes. It is time for Pennsylvania to join them.
 
Please join me in co-sponsoring this critical investment in our workforce which  is also an investment in our Commonwealth.
 



Introduced as HB1272