Maria will be a seventh-grader at the Cathedral School in Harrisburg, Pennsylvania this fall. She spells success – EITC. A scholarship made possible by a business’s generous contribution through Pennsylvania’s Educational Improvement Tax Credit (EITC) program allows her family to choose Catholic education for Maria.
The EITC, established in 2001, provides businesses with a tax credit for the donations they make to scholarship organizations, which then provide scholarships to children. In essence, it gives parents like Maria’s mom and dad the economic means to choose the learning environment they believe best meets the needs of their children, regardless of their family income. During the 2007-08 school year, 44,000 children received EITC scholarships. Since the programs inception in 2001, more than 3,600 Pennsylvania companies have participated in the EITC program donating almost $350 million to participating organizations. The EITC program currently provides $75 million for K-12 and pre-kindergarten scholarships.
The EITC program recently received some modifications that will make a big difference in how companies can take advantage of the tax credits. Special thanks to Senator Jane Orie from Allegheny County, Senate Majority Leader Dominic Pileggi from Chester County and Representative Keith McCall from Carbon County for their determined advocacy for changes that increased the amounts which each company can contribute to a scholarship organization. Pre-K contributions went from a maximum of $100 K to $150K and K-12 from $200K to $300K. In addition, Subchapter-S corporations, partnerships, limited liability partnerships and limited liability companies become eligible to fully participate in EITC.
“Now many more companies can make this direct investment in our children’s education,” said Dr. Robert J. O’Hara, Jr., Executive Director of the Pennsylvania Catholic Conference (PCC). “And those who give to scholarship organizations can give more. It helps a lot more companies and a lot more students. This is a victory for school choice advocates.”
Tax credits are not deductions. A tax credit is an actual reduction in the amount of tax a business will pay. In essence, a business can pay its taxes directly to the Commonwealth, or, by making a donation, substantially reduce its tax liability while helping families and building community good will.
To receive its tax credit, the business simply submits a one-page application to the Department of Community and Economic Development (DCED). Tax credits are awarded on a first-come, first-served basis. After approval by DCED, businesses must make their contribution(s) within 60 days.
Families may apply for scholarships, which are awarded according to the scholarship organization’s criteria. Minimally, scholarships must go to students with annual household incomes of $50,000 or less with an additional $10,000 allowance for the student and each other dependent living in the same household. In the case of Catholic schools, each diocese in Pennsylvania has its own scholarship organization. Additionally, there are scholarship organizations associated with other private or religious schools.
To learn more about EITC visit www.paschoolchoice.org or call 877-REACH 24.
PCC Column August 2008 by A.B. Hill, Communications Director of the Pennsylvania Catholic Conference – the public affairs arm of Pennsylvania’s Catholic bishops and the Catholic dioceses of Pennsylvania.