A tax credit program that can actually make a difference | Editorial

This week, Governor Wolf thankfully vetoed a bill that would have expanded tax credits that corporations use to help underwrite private and religious school tuitions. The Educational Improvement Tax Credit program currently allows $110 million in tax revenues to be diverted to a program that gives families tuition help for parochial or private school education. But the EITC’s lack of transparency and accountability is very problematic. The program is administered by the Department of Community and Economic Development– not the state Department of Education -- and is not allowed to release any data that would show how many children use the program, what the educational outcomes are, or details about participants, including the incomes of the families who participate. That last is key, because the way the program is structured, the salary threshold for eligibility is a family income of $85,000 a year. That belies the major argument supporters make defending the program -- claiming it’s to help low income families have more choice for educating for their children.

House Speaker Mike Turzai (R-Allegheny) championed the expansion bill, which was approved and sent to Wolf’s desk last month. It would have essentially doubled the number of tax credits available, increasing the total by $100 million, expanding eligibility to families making $95,000, and opening the door to continual expansion of the program. In his veto of the bill, Wolf rightly pointed out that the state is struggling to find enough money for public schools. And make no mistake: tax credits diverts money from other things. Supporters vow to keep fighting for it.

If supporters feel so strongly about helping low income families, maybe they should consider expanding a better EITC program: the Earned Income Tax Credit. That’s a federal tax break proven to have impact on helping low income families and improving the poverty rate. EITC was created to reward work. Working families, especially those with children, receive on average $2488 refund.

It’s money that gets spent, pushed back into the economy, and helps stabilize families. Families can pay for routine maintenance and repairs as well as health care. . The program has historically had strong bipartisan support. Because it has such a direct impact on reducing poverty28 states have supplemented the federal program with state EITCs. Many states are considering expanding their programs.

Not in Pennsylvania, though.

A valiant attempt to create a state EITC in 2008 failed. Even worse, in 2012, under Governor Corbett, the state eliminated funding that helped low income people file taxes and apply for the EITC.

According to the Center on Budget Policies and Priorities, if Pennsylvania issued a low-level benefit equivalent to 5 percent of the federal EITC, it would cost the state about $105 million in 2020. What a coincidence: that’s about the same amount that Turzai wanted to increase the education tax credit.

If state lawmakers were really interested in helping low income people with a program proven to get results and encourage working, they should be studying the possibility of expanding the “good” EITC ...instead of the one that helps well-heeled families get a deal on their private school tuitions.