Issue Spotlight: Two Critical Tax Credits for Working Families in Jeopardy
Congress may soon act on a long-term deficit reduction plan that could mean deep cuts to tax credits for working families — including the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). The budget passed by the U.S. House in March 2013 would let improvements to the EITC and CTC enacted in 2009 expire and requires billions in new spending cuts that Congress would likely take from the refundable portion of the tax credits.
It appears that legislators have decided to raise new, and necessary, revenue by expanding the sales tax base to include more goods and services instead of increasing the sales tax rate. There are good reasons to broaden the base of the sales tax, if it is done in ways that make the tax more equitable. But a broader sales tax is still likely to fall more heavily on low-income families. Legislators can limit the burden on those least able to bear it by coupling the sales tax expansion with a new refundable sales tax credit.
State budget discussions have reached a critical point. The agreed-upon $350 million increase in education funding represents an important step towards the budget Pennsylvania needs. But while the latest proposal to extend the sales tax to more services would raise needed revenues, it would also place too much of the burden on Pennsylvania’s lowest-income families.
Even at the the 11th hour, lawmakers can achieve a better budget – one that reinvests in education and human services, raises adequate revenues in a fairer way, and strengthens families and communities. The Pennsylvania Budget and Policy Center calls on lawmakers to include the following eight proposals in a final budget fit for the holidays.
Gov. Wolf and legislative leaders are currently negotiating over the terms of a plan to cut property taxes which would be financed by an increase in the state sales tax rate from 6% to 7.25%. This brief analyzes the size of the sales tax rate increase by income. It also compares that impact to how much different income groups would pay with an increase in the state personal income tax rate from 3.07% to 3.57%, as proposed by Gov. Wolf in October and rejected by the Republican legislative majority and nine Western Pennsylvania Democrats.
(HARRISBURG, Pa.) -- Aug. 24, 2015 -- Dr. Stephen Herzenberg, of the Pennsylvania Budget and Policy Center, called on members of the Pennsylvania House to focus on substantive budget negotiations rather than attempt futile veto override votes in the following statement released today:
“These planned line-item veto override votes are likely meaningless. Because the governor vetoed the entire Republican budget, only a veto override vote on the full budget would likely be constitutional. Moreover, until the General Assembly and the governor agree on how to raise all the revenue needed for a complete and balanced budget, agencies providing vital human services and other services included in line-item veto overrides have no guarantee that they will actually get the money they so desperately need.
HARRISBURG, PA (March 3, 2015) — Stephen Herzenberg, executive director of the Keystone Research Center (KRC) issued the following statement on behalf of KRC and the Pennsylvania Budget and Policy Center:
“Gov. Tom Wolf’s first budget would get Pennsylvania back on the right track by investing in the future to help our economy grow more rapidly and making progress towards getting the state’s fiscal house in order.
Gov. Tom Wolf presented his 2015-16 State Budget Proposal on March 3. The Pennsylvania Budget and Policy Center will be posting analysis, infographics and related documents on this page as they become available. Check back often for the latest updates.
HARRISBURG, Pa. (Feb. 18, 2015) – The Better Choices for Pennsylvania Coalition released today a list of 19 recommendations to make Pennsylvania’s tax system fairer. State and local taxes require low- and middle-income workers to pay more of their income in taxes than the highest-income Pennsylvanians, making it hard to raise sufficient funds for public schools, higher education, health care and other vital services.