Rethink the 2016 NJ Budget: It’s Beyond Time to Reverse the Tax Hike on Half a Million Working Families

11 May 2015 12:00 PM | Anti-Poverty Network of New Jersey (Administrator)

In 2010, as New Jersey was in the midst of the Great Recession, legislators and the governor cut an essential tax credit for working families who aren’t making enough to make ends meet. Five years later, these half-million New Jersey families are still living with this de facto tax hike, having lost between $250 and $300 million in crucial tax credits that help them get a leg up in high-cost New Jersey. Some of the poorest families have lost $331 a year, totaling $1,650 over five years.


As lawmakers once again compose a spending plan for the state, it’s essential – and beyond time ­– to at least reverse this tax hike and restore the state Earned Income Tax Credit (EITC) to its 2009 level. This move would give a much-needed boost to the far too many families who continue to struggle in this crawling economic recovery.


We often hear that these are tight times for the state. And indeed, they are, with lagging economic growth keeping revenues down and the demand for essential services continuing to grow. But the investment in restoring EITC is one of the best ways to ensure working families aren’t falling further behind, while boosting the state’s economy and paving the way to a brighter future for the children in these families.


While the $60 million cost in a $34 billion budget is minimal, the benefit to families is tremendous. The EITC promotes work, improves children’s school performance and increases children’s earnings once they reach adulthood. And it boosts the local economy by putting more dollars in working families’ pockets – dollars that don’t get socked away in offshore accounts, but rather get spent immediately and locally on essential goods and services.


Considering how effective the EITC is in fighting poverty, and how expensive it is to get by in New Jersey, restoring the credit should be a no-brainer. But lawmakers should not stop there. We need to get back to where we were in 2009, but we must not forget that families are falling further and further behind. Policymakers should start seriously considering boosting the credit above 25 percent, as six states and the District of Columbia have done,to give low-income working New Jerseyans a better shot at the middle class.


The state’s lowest income workers must not continue to be the only group shouldering heavier income tax burdens. Put the money where it should be.  


By Jon Whiten, Deputy Director of New Jersey Policy Perspective.

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