For Immediate Release
September 29, 2005
Contact: Todd Nyquist
(800) 222-9190
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Scarnati To Sponsor Bill to Aid Working Families

WARREN— In his new leadership capacity, State Senator Joe Scarnati of the 25th District will now have greater involvement in improving the lives of working families and businesses alike and is introducing legislation to reduce tax burdens and provide wage supplements to workers in the Commonwealth.

"When we talk about easing the tax drain on our workers and their families, it is essential that we establish effective means to improve economic stability for individuals struggling to make ends meet," Scarnati stated.  "With rising gas prices, insurance premiums, and utility rates, this program puts money back in the pockets of those people who need it the most."

More specifically, the EITC program is a refundable tax credit for low to moderate income families, which means that if a worker's income tax liability is less than the amount of the credit for which he or she qualifies, then the worker receives the remaining amount of credit as a refund. 

"Simply put, as an example, if a worker makes $15,000 and pays Pennsylvania personal income tax at a rate of 3.07%, his or her tax liability is $460.50," Scarnati stated.  "If the $460.50 is lower than the amount of the credit, then the working family would receive the remaining amount as a refund."

Scarnati's legislation will associate with the Federal Earned Income Tax Credit by providing workers with a state refundable Earned Income Tax Credit set at 20% of the Federal EITC. 

"This program is about setting sound policies that reach out to our working families without placing an uncompetitive demand on our businesses," Scarnati added.  "What we are fundamentally doing is finding a real alternative to increasing the state's minimum wage.  This program is not subject to payroll taxes and does not reduce income based eligibility for other needed government programs."

Scarnati also reasoned that the motive for 18 other states having such a program was due to a study done by Burkhauser and Glenn, which found that dollar for dollar, an EITC will put ten times as many dollars into the pockets of working families than an increase in the minimum wage.

 "Clearly this program offers economic fairness to our workers without placing more regulations on our businesses," Scarnati stated.  "This is the reason why EITCs have typically been supported by both the business and social service sectors."

Also Scarnati added, this new program termed Earned Income Tax Credit (EITC) would complement Pennsylvania's current Personal Income Tax Forgiveness program.  A recipient would then receive what would be the greater amount of the two programs.   

 "The General Assembly and the Administration must be more active in providing tax relief to working families, property owners, and businesses," Scarnati concluded.  "As Majority Deputy Whip, my focus is on structuring a monumental tax relief package that reflects heavily on the need to advance our struggling economy." 

***On a final note Scarnati mentioned that this program will be a part of a hybrid property tax reform plan, which Scarnati will introduce in the special session.