Senators Menendez & Booker and Advocates: Don’t Extend Business Tax Credits without Doing the Same for Credits for Working Families

Senators Menendez & Booker and Advocates: Don’t Extend Business Tax Credits without Doing the Same for Credits for Working Families

If Congress Punts, New Jersey Families Stand to Lose $256 Million a Year

U.S. Senators Bob Menendez and Cory Booker joined New Jersey advocates today to call on Congress to act this year to protect crucial improvements to tax credits that help build economic security for hundreds of thousands of New Jersey families.

The improvements made in 2009 to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) will expire at the end of 2017 if Congress fails to act. This fall is the best opportunity for lawmakers to make these fixes permanent, because it is also considering making permanent some business tax breaks. Congress should not take care of business interests while leaving behind millions of working families and their children.

“Let’s be clear, a vote against these important family credits is a vote to increase the taxes on millions of working families, plain and simple,” said Senator Menendez. “It has been recognized then and now, by Republicans and Democrats, liberal and conservative economists, as one of the most effective public policy tools against poverty, particularly childhood poverty. That’s why we all need to work together to fight for an EITC and CTC that pulls people out of poverty instead of pushing them back in.”

“Since my time as Mayor of Newark I’ve made it a priority to ensure families know how these tax credits can help them, including the creation of a free tax center in City Hall and helping promote VITA centers throughout the city,” said Senator Booker. “Now it’s up to Congress to make improvements to these critical tax credits like EITC and CTC, permanently, in order to do what’s right for working families in New Jersey and across the nation. These tax credits are pro-work and pro-family and deserve bipartisan support.”

A new Fast Facts brief from New Jersey Policy Perspective (NJPP) released today tallies up the potential damage to New Jerseyans if Congress fails to act:

• About 435,000 children in 219,000 New Jersey families will lose some or all of their credits

• These families will lose nearly $256 million in federal credits each year that help them pay for necessities

• Each family will lose an average of $1,166 a year in federal credits – the sixth highest among all 50 states

• About 213,000 children, and 480,000 New Jerseyans total, will be pushed into – or deeper into – poverty

“The notion that Congress would make business tax breaks permanent without addressing the needs of working families defies common sense,” said Gordon MacInnes, President of NJPP. “The benefits for working families are shared immediately and locally producing a stronger New Jersey economy. The business tax breaks are of more dubious value.”

These working-family tax credits help millions of Americans who work for low pay – and their children. And they help in both the short and long run. These credits promote work, and because they improve children’s school performance and overall well-being, they lead to increased earnings in adulthood. A total of 222,000 New Jerseyans – including 114,000 children – made it above the federal poverty line thanks to the EITC and CTC, each year, on average, from 2011 to 2013.

Congressional inaction would hit New Jersey working families hard and would come just after they start to benefit from this year’s bipartisan increase in the state EITC. In fact, as NJPP’s Fast Facts notes, the potential loss in federal credits is far greater than the gain these working families will see from the state boost. And having a smaller federal EITC would mean a proportionately smaller state EITC for many families as well, doubling the pain.

In addition to making the EITC and CTC improvements permanent, Congress should also fill a glaring hole in the EITC by expanding it for working men and women who don’t have kids. Doing so could benefit about 350,000 New Jerseyans.

“No one should be taxed into poverty,” said Serena Rice, Executive Director of the Anti-Poverty Network of New Jersey. “It makes no sense that young people who are working to support themselves are ineligible for any credit, much less that you have to have a child before you can get a significant benefit.”