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Prieto & Greenwald Bill to End Tax Breaks for Millionaires, Restore Earned Income Tax Credit for Working Poor Advances
Measure Will Also Help Fund Critical Programs for Middle & Working Class FamiliesLegislation sponsored by Assembly Speaker Vincent Prieto and Majority Leader Louis Greenwald to eliminate the Christie tax break enjoyed by millionaires, restore the Earned Income Tax Credit (EITC) for the working poor and fund critical programs for middle- and working-class families was released by the Assembly Budget Committee on Tuesday.
"This legislation will restore shared sacrifice, a notion that has been extinct since the first budget of the Christie administration," said Prieto (D-Hudson/Bergen). "This is a responsible plan that meets our legally-mandated fiscal obligations and provides much-needed relief for those struggling the most by asking just a little more from the most fortunate among us."
"This plan enables us to live up to our responsibilities and do right by New Jersey's struggling working and middle-class families," said Greenwald (D-Camden/Burlington). "We cannot afford to continue the governor's manic approach to protecting the mega-rich while praying that the economy improves. We have too many mounting financial obligations to continue praying the budget will blindly fix itself on its own."
The bill would change New Jersey's gross income tax rate from 8.97 percent to 10.75 percent for the wealthiest roughly 16,000 taxpayers with taxable incomes exceeding $1 million, restoring it to its 2009 level for a temporary three-year period over taxable years 2014, 2015 and 2016.
By ending the tax break for millionaires, the plan will help provide money in the FY 2015 budget for core Democratic priorities, including health care for low and middle income women, nursing homes and assisted living facilities, and domestic violence programs, all of which have had funding difficulties under the Christie administration.
The bill would also increase the benefit amount under New Jersey's earned income credit program to 25 percent of the federal earned income tax credit amounts, restoring another Christie cut and giving tax relief to working poor families beginning with taxable year 2014 and thereafter.
The Earned Income Tax Credit is a credit for working poor residents who work and have earned income. The governor reduced the credit from 25 percent of the federal tax credit to 20 percent in his first budget in 2010, effectively raising the income tax liability for New Jersey families by $45 million. The bill would reverse the cut and restore the program to its previous level of 25 percent.
According to federal and state data, some 528,000 taxpayers received an average state EITC benefit amount of approximately $430 during fiscal year 2010. Under the bill, the average EIC benefit amount would grow to approximately $545, assuming a level number of participants.
The state credit is based on the federal credit and considered the nation's largest and most successful anti-poverty program. Created in 1975 to ease the burden of payroll taxes for the working poor, the federal earned-income tax credit was expanded by President Reagan, and has substantially reduced child poverty and increased incentives to work.
"This budget is a living, breathing testament to our priorities - working class tax relief, access to quality health care for women and the elderly, and living up to our promises," added Prieto. "Considering the enormous financial challenges we are faced with, this is a reasonable and responsible approach to meeting our obligations and protecting our most vulnerable."
"Clearly, the Governor's plan of providing tax cuts for millionaires at the expense of working families has not worked," added Greenwald. "Five years into that plan, our economy is still sputtering. Giving struggling families the resources they need to earn their way out of poverty will do far more to revive our economy than giving millionaires more money to stow away for a rainy day."
The bill now awaits consideration by the full Assembly.
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