Turner/Whelan Bill To Fully Restore Earned Income Tax Credit Clears Senate Budget Panel

 

TURNER/WHELAN BILL TO FULLY RESTORE EARNED INCOME TAX CREDIT CLEARS SENATE BUDGET PANEL

Measure Would Increase EITC to 2010 Levels, Provide Needed Tax Relief to State’s Working Poor

TRENTON – Legislation sponsored by Senators Shirley K. Turner and Jim Whelan that would strengthen a proven anti-poverty measure and put money back into the pockets of New Jersey’s working poor was approved today by the Senate Budget and Appropriations Committee.

“The Earned Income Tax Credit is a lifeline to help make ends meet for those who are scraping to get by,” said Senator Turner (D-Mercer/Hunterdon). “With the failed economic policies of the Christie administration that have caused the middle class to shrink and more people to be pushed into poverty, it is even more essential that we provide New Jersey’s working poor with extra tax relief to ensure the can continue to provide for their children and families. Reducing the benefit during a recession was simply cruel for those who are struggling to make ends meet. It is time that we do the right thing and restore the funding.”

The bill, S-2535, would restore the Earned Income Tax Credit (EITC) level to 25 percent of the federal credit amount. Governor Christie reduced the credit to 20 percent in his FY2011 budget, but last week, as part of his conditional veto of the minimum wage, proposed increasing the EITC back to the limits prior to his cuts. This measure would provide that increase one year ahead of the Governor’s proposed restoration. Senators Turner and Whelan note that an increase in the EITC should not be tied to accepting a minimum wage deal that does not provide real relief to New Jersey’s working families.

Additionally, the Senators note that last year, Governor Christie attempted to tie an increase in the EITC to accepting his across the board income tax cut – a measure that would have disproportionally benefitted the wealthy over New Jersey’s middle and working classes. The Legislature approved a bill that would restore the EITC levels to 25 percent last June. The measure was absolute vetoed by the Governor.

“The Earned Income Tax Credit is a time-tested program that offers real tax relief to the working poor in order to transition from a life of poverty to one where they can successfully provide for their families. As one of the most effective means of fighting poverty in the United States, it only makes sense that we should fully fund it here where hard-working, hard-hit families need our help the most,” said Senator Whelan (D-Atlantic). “Governor Christie has stated that he hopes to restore the credit to its previous amount to provide sound economic footing for New Jersey’s working poor. With this legislation and his support, we can provide a lift to struggling families during these challenging economic times.”

The earned income tax credit is a refundable federal credit program that lessens the burden of payroll taxes such as Social Security and Medicare that disproportionately affect lower income workers. The federal EITC lifted 6.6 million Americans – including 3.3 million children – out of poverty in 2010. In 2012, more than half a million New Jerseyans benefited from the program, which – according to the Washington, DC-based Center for Budget and Policy Priorities – is the nation’s most effective antipoverty program for working families.

Since the program’s enactment in 1975, 25 states plus the District of Columbia supplement the program with their own state-based EITC program. In New Jersey, the credit is calculated as a percentage of the federal EITC, which is adjusted yearly based on inflation. Credit amounts are distributed based on income and family size. For example, a single parent with two children would have had to make less than $41,952 in 2012 to be eligible for the credit. In 2008, 87 percent of those receiving the EITC made less than $30,000.

According to the Center for Budget and Policy Priorities, there is extensive evidence that the EITC encourages families to obtain jobs and remain employed. Supporters of New Jersey’s EITC attribute the program to a significant increase in labor force participation among New Jersey families and a method of supplementing the incomes of low-income working families, stabilizing the economic outlook as they move up the career ladder and better ensuring they remain independent from public assistance. President Ronald Reagan called the program “the best anti-poverty, the best pro-family, and the best job-creation measure to come out of Congress.”

The bill was approved with a vote of 9-0-4. It now heads to the full Senate for consideration.

 

"I’m excited as hell about CD 5. We have encouraged Congressman [Steve] Israel to get involved in CD 5."
—Democratic State Party Chairman John Currie