Bill Would Increase NJ EITC to 40 Percent of the Federal Level
(TRENTON) – Legislation Assembly Speaker Vincent Prieto and Assembly Budget Chairman Gary Schaer sponsored to help working poor families by increasing the New Jersey Earned Income Tax Credit to 40 percent of the federal level was approved 51-22 Monday by the Assembly.
The bill (A-40) is part of the Assembly’s efforts to combat rising poverty in New Jersey and rebuild the state’s middle-class.
“We know this tax credit benefits its recipients substantially, but we clearly need to do more in the face of rising poverty in this state,” said Prieto (D-Hudson/Bergen). “We must rebuild our middle-class, and this will be an effective and responsible approach. Research very clearly documents the EITC’s beneficial effects on poverty, consumption, health and even the academic outcomes of children. In fact, the positive effects on children indicate this may actually halt the intergenerational transmission of poverty as well. This is among the best actions we can take to combat poverty in our state.”
“This tax credit has been credited with reducing child poverty and increased work incentives,” said Schaer (D-Bergen/Passaic). “This tax credit can provide some financial stability to families struggling to keep up with their expenses. Working families need financial relief and this bill delivers that.”
The state’s EITC supplements the federal EITC, an income tax credit for low-income working people that rewards work and boosts the pay of families. Working families with qualifying children and earned incomes up to $52,247 are eligible for this tax credit. Working New Jerseyans are currently eligible to receive 30 percent of the federal credit received through the state EITC.
“This bill makes work pay even more for working families by offsetting the burden of payroll taxes for low- and moderate-income workers,” Prieto said. “Even President Reagan called the EITC a ‘sweeping victory for fairness’ and ‘perhaps the biggest antipoverty program in our history,’ so let’s make it as valuable as we can for New Jersey families.”
According to a recent report by Legal Services of New Jersey, more New Jersey residents are in poverty now than in the past five decades.
The agency estimates about 2.8 million adults and 800,000 children lived poverty in New Jersey 2014. That’s 40 percent higher than it was before the 2008 Great Recession.
According to the New Jersey Department of the Treasury, about 552,900 taxpayers claimed a credit during 2014, the most recent year for which data is available. Based on available federal Internal Revenue Service data, it’s estimated that under the bill, the average NJ EITC benefit amount will increase by $255, from $708 in 2015 to $963 in 2016.
“What’s even more concerning than the shocking number of residents living in poverty is that the outlook is bleak unless we take significant steps to change the status quo,” Prieto said. “We must rebuild the middle-class and make New Jersey more affordable with common sense ideas and reforms. This is one of them.”