Continue Federal Tax Credits

To: The Pennsylvania Congressional Delegation:

Too many low and moderate-income Pennsylvanians continue to face economic insecurity and tough choices about keeping the roof overhead, food on the table, prescriptions filled and children connected to quality child care. The after effects of the national recession have not yet lessened the number of Pennsylvanians out of work or turning to food stamps, subsidized child, or health care.

Now more than ever it remains critical that national policies assure that work pays and families are able to retain as much of their hard earned wages through well-targeted and fiscally responsible tax legislation.  

We urge you to support the continuation of tax credits that effectively promote work, are family-friendly, and are good for the economy. Specifically we urge you to make the following tax policies permanent:    

  • The Child Tax Credit, which was expanded as part of the economic recovery act benefitting 576,000 Pennsylvania children, to allow low-income working families to count more of their wages below $13,000 to calculate their credit. If this tax credit is reversed, a mom or dad working for the minimum wage raising two children would see her/his credit cut from $1,750 to $250. The credit should also be expanded to apply to a family’s first dollar of earnings.

  • The Earned Income Tax Credit (EITC), which was increased under the economic recovery act for families with three children, benefitting over 3 million working families, including 319,000 children from Pennsylvania. Previously, a family with five children received the same credit as a family with two children despite the undeniable additional costs of supporting a larger family.

  • The EITC marriage penalty relief, which the economic recovery act expanded to reduce the financial penalty some couples face when they marry. About 5 million adults and 8 million children benefit from the change.

  • The American Opportunity Tax Credit, which was made available to millions of low- and moderate income students for the first time under the recovery act. The credit’s maximum value increased from $1,800 to $2500.

  • The Child and Dependent Care Tax Credit, which the President proposes to extend to more families in his FY 2011 budget. For a family earning $50,000, the proposal would increase the maximum credit from $1,200 to $2,100.  

Again, we urge extension of tax policies from 2001 and 2003 only if they are directed toward American families with low and moderate incomes, allowing cuts for the wealthiest families to expire as scheduled. If the tax benefits for the top two percent of U.S. households are not allowed to expire it is expected that the cost will be $826 billion over the next ten years, adding to the long-term risks that growing deficits and debt pose to the economy and creating even more pressure to slash funding for key federal investments.

Finally, we would urge a responsible approach to the future of the estate tax requiring that it be reinstated at the generous 2009 parameters (exempting estates valued at up to $3.5 million per individual and up to $7 million per couple). Providing higher exemption levels is fiscally irresponsible.

We urge you to support federal tax policies that promote work, help parents provide for their children, and build a solid foundation to help get our nation’s finances in order.

Links

www.pccy.org

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