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06/18/2024 04:21 AM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20230&cosponId=40828
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Senate of Pennsylvania
Session of 2023 - 2024 Regular Session

MEMORANDUM

Posted: May 24, 2023 10:12 AM
From: Senator Lynda Schlegel Culver and Sen. Judith L. Schwank
To: All Senate members
Subject: Enactment of an Earned Income Tax Credit in Pennsylvania
 
The inability to afford basic needs is all too common for many of the Commonwealth’s lower income, working households. With many pandemic supports set to expire, the struggle will only worsen for many. Therefore, we are proposing legislation to 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. The average family in Pennsylvania received $1,874 through the federal EITC in 2021. Today, 33 states offer a tax credit against state income taxes.
 
For families living paycheck to paycheck, referred to by the United Way of Pennsylvania as ALICE, an EITC will provide much needed assistance with the costs of childcare, food, transportation, clothes, and other household expenses. According to the UWP’s recently released ALICE Report, the ALICE population increased by 7% from 2019 to 2021 in Pennsylvania. In 2019, if the Commonwealth had had an EITC program, the average family would have received a tax credit between $197 and $594.
 
Per United Way of Pennsylvania’s fiscal impact report, “Implementing a State Earned Income Tax Credit (EITC) in Pennsylvania: A Benefit-Cost Analysis,” for every $1 spent on a state Earned Income Tax Credit by the Commonwealth, Pennsylvania receives $4 back in economic growth and saves $3 dollars in social spending. This investment in our working households will not only help them afford the basics, but it will also provide a return to our Commonwealth in the form of human services savings and economic growth.
 
With pandemic supports expiring and inflation tightening household budgets, it is imperative that we find a commonsense solution which provides economic relief for hardworking Pennsylvanians. Please join us in co-sponsoring this important anti-poverty, pro-worker measure.
 
 



Introduced as SB848