The Earned Income Tax Credit (EITC) is one of the most successful anti-poverty programs in America. EITC puts money back into working Pennsylvanians’ pockets, promotes work, and encourages economic growth!
Since 1975, the federal government has been incentivizing work through the Earned Income Tax Credit. 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 $1,824 through the federal EITC in 2021. Today, 33 states – Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, and Wisconsin – offer a tax credit against state income taxes.
For low-income, working families, known 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. To help this population, we need to reward their hard work with an Earned Income Tax Credit. If Pennsylvania had an EITC program in 2021, as proposed, 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.
The COVID-19 Pandemic exacerbated many problems facing our households across the Commonwealth. With pandemic supports expiring and inflation tightening household budgets, smart investments in our workers need to be prioritized. Reach out to your state legislators today and ask that they help our hard-working Pennsylvania families and communities by enacting a state Earned Income Tax Credit!