Press Release

Dear Congress: It’s Time to Expand the EITC

Too many workers receive very small tax credits – or none at all – because they aren’t raising kids.

Published on Oct 25, 2016

A few weeks ago, New Jersey’s Earned Income Tax Credit (EITC) was increased for the second time in two years. The state credit, which piggybacks on the federal EITC, will now be 35 percent for 2016 taxes, up from 20 percent as recently as 2014.

While these increases to New Jersey’s EITC are crucial and improve the lives of working families across New Jersey, far too many New Jersey workers receive very small tax credits – or none at all – because they aren’t raising children. Today, some of New Jersey’s leading anti-poverty legislators and advocates came together to call on Congress to fix this problem in the coming months and ensure that working adults without children are no longer the lone group of Americans that the federal tax code taxes into – or deeper into – poverty. 

“This tax credit provides substantial relief to working families across New Jersey, and is one of the sharpest tools to fight poverty. That’s why I have made expanding the state EITC a centerpiece of my efforts to rebuild our middle class and combat poverty,” said Assembly Speaker Vincent Prieto, the prime sponsor of Assembly legislation to increase New Jersey’s EITC. “But as it stands, the EITC fails to deliver its well-documented benefits to a large and diverse group of New Jersey’s workers: adults – particularly young adults – who aren’t raising children. Expanding the EITC for these workers would provide an essential complement to our recent increase in the state EITC, and Congress ought to make this a top priority in the coming months.”

Senator Shirley Turner, the prime sponsor of Senate legislation to increase the New Jersey EITC, echoed the Assembly Speaker’s call to action.

“It’s crucially important that lawmakers boost the incomes of low-wage workers in high-cost New Jersey, which is why I’ve been such a strong supporter of increasing the state Earned Income Tax Credit,” said Senator Shirley Turner. “But state legislators can’t do it alone; we need the full partnership of Congress to expand the EITC so it no longer taxes adult workers who aren’t raising kids into poverty. We hope New Jersey’s Congressional delegation stands strong for these low-wage workers.”

Today’s press call accompanied a new report from New Jersey Policy Perspective (NJPP), which examines the impact EITC expansion would have on New Jersey’s low-wage workers. The report finds that between 343,000 and 504,000 Garden State workers would benefit from the three main federal proposals to expand the EITC – the strongest of which was proposed by New Jersey’s own Senator Cory Booker. The proposals to expand the EITC would reward the hard work of a broad swath of New Jerseyans – young and older, male and female, and across all races – who do important low-paid jobs in hospitals, schools, office buildings, and construction sites.

“Expanding the Earned Income Tax Credit is smart policy that has bipartisan support across the country, and its improvements are long overdue,” said Brandon McKoy, Policy Analyst at New Jersey Policy Perspective and author of the new report.“Allowing young workers not raising children to benefit more from the credit will put more money back in their pockets. In turn, they will spend that money and help stimulate New Jersey’s economy. Lawmakers in Washington should make this a priority now.”

Expanding the EITC for low-income workers without dependent children would raise their incomes and help offset the impact of other taxes they pay. Currently, the maximum EITC available (federal and state combined) to a New Jersey worker not raising kids is $683. Under the EITC expansion proposals, that could rise to between $1,350 and $2,025, depending on the plan.  

In a high-cost state like New Jersey, which leads the nation in the share of 18 to 34 year olds living at home, this income boost would help promote greater economic mobility for young workers, which in turn would help boost the economy.

“Every year New Jersey Citizen Action provides free tax preparation for over 5000 New Jerseyans at our tax preparation center in Newark. Many of these workers earn thousands of dollars in refunds because of the Earned Income Tax Credit, one of the best anti-poverty programs our country and our state has to offer,” said Ann Vardeman, Program Director at New Jersey Citizen Action. “However too many young workers and workers without children are being left behind from the economic benefits of the EITC. It’s time for Congress to include all low-income workers in the economic boost the EITC can provide.”

And the benefits of extending the EITC to childless workers go beyond helping low-income individuals and families afford more of their day-to-day needs. Decades of research on the EITC has shown improvements in health outcomes and increased employment for EITC recipients, and recent studies indicate that this expansion for workers not raising children could reduce crime and increase public safety.

“Far too many workers in New Jersey are facing economic hardship and unable to make basic ends meet without turning to increasingly strained private charities,” said Renee Koubiadis, Executive Director of the Anti-Poverty Network of New Jersey. “The EITC has been one of the most successful anti-poverty programs in our country’s history, but more needs to be done to make sure people who need it most can benefit from the EITC.”

Today marks the kickoff of a New Jersey campaign to raise awareness about the need to expand the EITC at the federal level. The campaign, led by New Jersey Policy Perspective with key partners like New Jersey Citizen Action and the Anti-Poverty Network of New Jersey, is focused on ensuring that New Jersey’s Congressional delegation includes this crucial expansion as part of the important work done in D.C. early next year. But it also includes a path forward for state policymakers, should Congress fail to act.

“Increasing the earned income tax credit for working people without children helps to address a clear moral, as well as financial, problem we face today in New Jersey: our tax code still does not provide those at the very bottom of the economic ladder as fair a chance at moving up as it does to those already nearer the top,” said Rob Gregson, Executive Director of the Unitarian Universalist Legislative Ministry of New Jersey. “As people of faith, we have a special obligation to advocate for all those who struggle against the odds and to stand up for justice–which is why the Unitarian Universalist Legislative Ministry of New Jersey and our associated congregations fully support this targeted increase in the Earned Income Tax Credit.”