The Earned Income Tax Credit is the best tool available to give New Jersey’s working families a shot at success. I want to commend the Senate President for being a champion for these families by pushing to increase New Jersey’s EITC to 40 percent of the federal credit.
The EITC boosts the incomes well over a half-million working families in New Jersey who aren’t paid enough to get by. It’s a proven policy initiated and sustained with strong bipartisan support with decades of success under its belt, and it’s a poverty solution well worth investing in. By boosting these families’ incomes, the EITC lifts – or keeps – many of them out of poverty and, crucially, gives their kids a better short at success later in life. Children from EITC families do better in school, and then have stronger employment prospects and greater earnings potential as they become adults.
And if you want tax fairness, the EITC is the most efficient and effective way to help fix a tax structure that is out of balance.
As it stands now, New Jersey taxpayers who are paid less than $22,000 a year pay the highest share of their income to state and local taxes: 10 percent of their incomes go to pay the tax bills. Meanwhile, the top 1 percent – folks with incomes over $758,000 – pay the least, with just 7.1 percent of their incomes going to taxes.
That’s because, even with a state income tax that is highly progressive and based on the ability to pay, other state and local taxes – namely property, gas and sales taxes – help make New Jersey’s overall state and local tax structure regressive.
If the EITC is increased from 30 to 40 percent, those poorest households would still pay the largest share of their incomes towards taxes, but not by nearly as much.
New Jersey is one of the most expensive states in the country, with housing costs in particular hamstringing the abilities of low-income and working-class families to move into the middle class and provide better opportunities for their children. Thanks to the leadership of the Senate President and the Assembly Speaker, policymakers have the opportunity to give these families a better shot at success – we hope they will seize it.