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.
The General Assembly is considering legislation that would allow some employers to pocket the state withholding taxes of new employees. The legislation is costly and will continue to shift more of the cost of services to individuals and local property taxpayers.
The Legislature is considering a new type of business subsidy that has serious potential for misuse. House Bill 2626 would allow new companies to keep the income taxes paid by employees rather than sending those tax payments to the state.
Pennsylvania has enacted billions of dollars in business tax cuts and spent hundreds of millions on tax credits, yet there is little information available to determine whether these large tax expenditures have done what they promised to do, PBPC Research Director Michael Wood testified before the House Finance Committee today.
In addition to passing a state budget, the General Assembly is moving legislation to change the rules for charter school authorization, expand the Educational Improvement Tax Credit, provide additional funding for distressed schools and establish new standards for teacher evaluations.
A state program billed as providing corporate contributions to private and religious school scholarships receives $9 out of every $10 from state taxpayers, according to a new analysis from the Pennsylvania Budget and Policy Center.
Expanding the Educational Improvement Tax Credit (EITC) now will drain more state revenue away from public schools at a time when many are laying off teachers, cutting kindergarten or prekindergarten, and eliminating courses, PBPC researchers write in a new analysis.
The Pennsylvania House amended the Senate Budget last week to add $91 million to the Departments of Education, Environmental Protection and Public Welfare, but because new spending had to be offset elsewhere the plan also includes cuts to the Governor’s office, economic development programs and general government operations.
Governor Tom Corbett's 2011-12 state budget makes deep cuts to education and higher education, as well as across-the-board cuts to most services and departments. At $27.3 billion, the budget is 3.1%, or $866 million, less than the available 2010-11 budget.