Category: Blog

Undocumented Immigrants Pay Taxes: County Breakdown of Taxes Paid

Posted on by Erika J Nava

While undocumented immigrants in New Jersey now face greater threats from the federal government than ever before, new data at the state and county level released by the Institute on Taxation and Economic Policy make clear that the Garden State’s undocumented immigrants are an important economic benefit to this immigrant-rich state.

New Jersey’s undocumented immigrants pay about $587 million each year in state and local taxes, the sixth highest level of all states. And the more integrated these neighbors become in our society, the higher their tax contributions. For example, the same undocumented New Jerseyans would pay an additional $73 million – the eighth largest jump of all states – should they be covered by comprehensive immigration reform.

At the county level, undocumented folks contribute from $14 million in Atlantic County, which is home to 12,000 undocumented immigrants, to almost $80 million in the county with the largest count of undocumented immigrants, Hudson County. Hudson County and Middlesex County, the two counties with the highest number of undocumented immigrants, would see the greatest increase in taxes paid if undocumented immigrants were granted legal status.

While inflammatory rhetoric and repressive actions toward immigrants and refugees seem to be the “new normal” in the halls of power of Washington, D.C., the facts still matter – and they show that undocumented New Jerseyans are an integral part of our state’s economy.

New Jersey’s immigrants aren’t “takers” as extremists want you to think, they are taxpayers who are willing to contribute to our state and want to make New Jersey better.

New Jersey Takes A Step Toward Restoring Health Care Mandate

Posted on by Raymond Castro

Today’s passage of legislation restoring the individual mandate is essential to keep insurance affordable and sends a powerful message to Washington that New Jersey will not allow the Affordable Care Act to be sabotaged. Despite New Jersey’s progress in reducing the number of uninsured residents, this measure is needed because there are still about 700,000 New Jerseyans without coverage.

This bill is critically important to stabilizing the health insurance market and will help make sure that insurance coverage remains affordable for as many New Jerseyans as possible. The state still has hundreds of thousands of uninsured residents and it is vital that we do all we can to make sure everyone can secure affordable health insurance and improve public health.

If New Jersey does not act the consequences will be dire. NJPP estimates that the number of uninsured in New Jersey will increase by about 300,000 over the next decade; premiums will rise about 10 percent; the state will lose billions in federal Medicaid funds and premium subsidies; and taxpayers will be hit with a much bigger bill for charity care payments to hospitals.

Importantly, the revenues collected from the penalties can be used for a reinsurance plan that will decrease the cost of providing health coverage for very sick individuals, thereby further reducing premiums for these families as well as generating federal funds( if a waiver is approved). This bill (S-1878) also passed today.

The penalty should encourage younger, healthier people to obtain insurance, spreading the risk in the health insurance pool. Without robust participation of these individuals, insurance premiums will climb and the market could destabilize.

This bill will mainly help 150,000 middle-class New Jerseyans who purchase their insurance directly since they are not eligible for federal subsidies under the Affordable Care Act and therefore must pay for the full cost themselves. Since premiums already increased this year in anticipation of the repeal of the mandate, these families would save up to $76 million next year by its restoration.

Currently a four-person family must pay about $23,000 a year; when the maximum out of-pocket costs are added, the total cost increases to $37,700, which guarantees that insurance is unaffordable.

Lower-income families will also benefit because the proposed legislation will encourage many uninsured to seek out more-affordable insurance. National research shows most of these individuals are eligible for federal subsidies and that about half are eligible for a plan that costs less than the penalty they may otherwise have to pay. Due to the mandate, over 100,000 New Jerseyans found out they were eligible for Medicaid – which has no cost sharing – when they searched the Marketplace for insurance.

The bill also applies the penalty to anyone who purchased a plan that does not meet the essential benefits requirements in the ACA or New Jersey law. This measure was added to prevent short term and association plans – sometimes called “junk plans” which are being pushed by the Trump administration to circumvent the ACA – from being sold in New Jersey.

Legislature Passes Bill To Extend Earned Sick Leave to Over 1 Million New Jerseyans

Posted on by Brandon McKoy

Today, New Jersey achieved a huge victory in supporting workers, families and businesses by passing legislation (S-2171) that will extend earned sick leave to over one million employees. No longer will workers have to choose between staying home to get well – losing a day’s worth of pay if not their job in the process – and going to work, which would put their colleagues and the public at risk for infection. As a result of this legislation, public health and worker productivity will improve, and the state’s economy will be made more resilient.

Currently, about seven out of ten workers in New Jersey already have access to earned sick leave. Making sure that this benefit is extended to just about everyone is simply common-sense and shows that New Jersey believes in supporting family values. It’s a terrible thing when a worker, especially parents with sick children, have to make the difficult choice of going to work or staying home and getting healthy. It’s nice to now say that workers don’t have to choose between their health or the health of their family and their job.

Businesses will benefit from this legislation as workers with access to earned sick leave are more productive and engage in less turnover. Businesses that don’t currently offer earned sick leave would experience savings and reduced costs after implementing this policy. Of the workers who don’t currently have access to earned sick leave, a significant share work in food and retail industries, meaning they interact with the public. Making sure that employees in those sectors have the ability to stay home and get well instead of being forced to go to work will benefit public health and is expected to help cut down on the number of viral outbreaks.

Passage of 'Out-of-Network' Bill a Historic Step Forward

Posted on by Raymond Castro

The legislature made history today by finally passing legislation (S-485) that will help to address surprise billing and the high cost of health insurance. This is critical as polls show that a primary concern of New Jerseyans is the high cost of health care. While this legislation is extremely important and welcomed, more legislation will be needed in the future to bring down these costs.

Simply put, insurance is becoming unaffordable in New Jersey, especially for middle class families who are not eligible for public coverage or subsidies. While it took many years to finalize this bill, it demonstrates that the legislature can take on powerful interest groups and establish policies that will benefit consumers.

The average cost for a family with employer-based coverage is about $18,000, the 13th highest amount in the nation. This affects the family, but also the employer which shares in the cost and is one of the main reasons why the number of New Jerseyans covered by small employers has dropped by half since 2010 (from 740,000 to 371,000). This problem is even worse for families who do not have employer- based coverage and must pay the entire cost for coverage in the individual market; a four-person family typically pays about $23,000 in premiums, plus cost sharing, which often represent between a quarter to a third of their gross income.

This bill addresses this problem in two major ways. First, it provides new protections and transparency for New Jerseyans to avoid surprise billing, including a prohibition on balanced billing. In a 2016 report on this issue, NJPP estimated that 168,000 New Jerseyans receive surprise bills from their health providers annually. These bills amount to $420 million and average about $2,500 per person. Under this legislation, many of these individuals would no longer receive a bill or, if they did, they would know about it before they agreed to medical treatment. New Jerseyans who obtain their insurance in the individual or small group market, Medicare or Medicaid, and the health system for public employees already have some – but not all – of these protections, however many of the 3.8 million New Jerseyans in self-insured employer-based plans do not.

The second way in which this bill will reduce costs is that it addresses the problem of health providers that submit claims to insurers for exorbitant, inappropriate costs by requiring a fair and expedited method to arbitrate bills when there is no agreement on what should be paid. In effect a small number of health providers can charge significantly higher bills by going out of network.  NJPP estimated that the total claims submitted to insurers for out of network costs amounted to about one billion dollars in New Jersey, much of which are passed along in higher premiums and cost sharing to five million New Jerseyans with commercial insurance. The new arbitration system also benefits many health providers because it provides a quick and fair method to resolve billing disputes.

New Jersey Legislature Passes Tuition Equality Bill

Posted on by Erika J Nava

Today, New Jersey achieved true tuition equality and joins 8 other states – from bright blue California to deep red Texas – in allowing undocumented students to apply for state financial aid to secure a college degree. The Garden State becomes the first state on the east coast to have such a policy and is the first state to pass a major progressive immigration bill this year under the Trump administration.

This common-sense policy will put undocumented students – and New Jersey – on the path toward greater economic opportunity and success. It’s an important change that enables undocumented students who graduated from our high schools to have a real shot at earning a college degree. This will help us develop a more highly educated workforce that strengthens our economy and secures a brighter future, and that benefits everyone.

With this policy, New Jersey sends a clear message that our state can mitigate the federal government’s attacks on immigrants by taking actions that both honor our history as the golden door for immigrants and maintain our reputation as a welcoming, inclusive place. Considering the fact that more than half of new jobs will soon require a bachelor’s degree, increasing access to higher education by making it more affordable for all students – regardless of immigration status – is a critical step to ensuring the long-term strength and sustainability of our state’s economy.

Deliberate Disinvestment Has Been A Disaster for New Jersey

Posted on by Sheila Reynertson

Last week Governor Murphy reiterated his support for a millionaire’s tax on New Jersey’s highest earners to help pay for some of New Jersey’s most pressing needs – property tax relief and reinvesting in K-12 education.

Senate President Stephen Sweeney, who posted a millionaire’s tax 5 times during Christie’s tenure and put it on the top of his list of legislative priorities as recently as November, now views a tax on New Jersey’s highest earners as only an “absolute last resort” and instead is pushing for a surcharge on large corporations to help fund education.

Despite some quibbling, it is refreshing to hear New Jersey most powerful politicians talking about cleaning up the state’s tax code and raising new revenues that the state desperately needs. But frankly, this should not be an “either/or” choice: New Jersey needs both. To really get the state back on track, profitable corporations and top earners in the state must pay their fair share.

Yet Assembly Speaker Craig Coughlin has taken a different tack altogether, stating that “our top priority should be to reduce spending, better manage our existing resources, and fully examine all revenues from existing programs before we raise taxes on anyone.”

But we’ve seen this movie before. And it didn’t have a happy ending for New Jersey’s economy or for its middle-class working families.  

Governor Christie boasted of his deep cuts to what he liked to call “discretionary spending” – in other words, state investments in higher education, direct property tax relief and other middle-class priorities. As he presented his final budget, he said those investments were $2 billion less than in 2008, creating what he dubbed “a new baseline for government.”

That baseline – reinforced by tax cuts that drained critical dollars from New Jersey’s coffers – led the state to suffer 11 credit downgrades from three major credit-rating companies during the Christie administration. In other words, this “new baseline” didn’t match the state’s needs.

That baseline means that over 10,000 state government jobs – and over 100 public programs – have disappeared, dragging down the overall economy and making it harder for the public servants who remained to serve the public.

That baseline means deliberate disinvestment in New Jersey families. It means that the state’s public schools are underfunded; that more children can’t thrive in high-quality Pre-K classrooms; that parents and college students are taking on more debt as state support of higher education drops; that seniors, the disabled and low- and middle-income homeowners dependent on dwindling property tax relief are left out to dry; that commuters are paying 30 percent more for tickets on a public transit system that has become unreliable and, in some cases, downright dangerous.

Here’s the reality: New Jersey has already reduced spending – and reduced it beyond a sustainable level, reduced it to the point where it’s putting our future at risk. The trickle-down agenda of tax cuts and spending cuts has been the state’s chief economic policy for the past eight years. Legislative leaders owe it to those who have been paying for those cuts to embrace a better plan. First admit that there’s no more room to cut spending without even further harming families. Then make a commitment toward raising new revenue, and doing so in an equitable way.

Already, the tired and false claim that higher taxes will drive millionaires and successful businesses out of New Jersey has come roaring back. This time, though, legislators should consider what it is about New Jersey that helps foster a growing class of millionaires in the first place. It is undeniable that the public assets that make this great state hum – mass transit to major economic city centers, high quality education, an educated workforce – are key ingredients of prosperity. In fact, New Jersey now has the second most millionaires per capita in the country with just about 1 in 12 households having $1 million or more in investable assets. That’s up from third place a year ago.

Public assets cost money, and they work best when we all chip in and pay our fair share. That can only happen if New Jersey takes critical, bold steps to make its tax code fairer and its finances more stable with new revenues.  

It's Time to Restore Food Assistance for Hundreds of Thousands of New Jerseyans

Posted on by Raymond Castro

The following are prepared remarks delivered today to the Senate Health, Human Services and Senior Citizens Committee.

New Jersey Policy Perspective strongly supports restoring critical food assistance to up to 160,000 Garden State households that include tens of thousands of seniors, people with disabilities and children, as S-839 does. Tragically, over the last three years, New Jersey lost up to $450 million in federal funds for nutritional assistance because the previous administration refused to tie energy assistance to SNAP benefits as permitted by federal law. Here are four major reasons why New Jersey should restore what are known as “Heat and Eat” benefits.

1. Many of New Jersey’s Most Vulnerable Residents Are Affected

Up to 160,000 New Jersey households who lost meals due to the failure to restore Heat and Eat were already hurting due to other SNAP cutbacks. This made it impossible for many of them to eat regular, balanced meals. Households with seniors and people with disabilities are hurt the most because of the way SNAP benefits are calculated. The average person receiving SNAP benefits now sees a paltry $1.29 a meal. Obviously, this is a big problem in a high-cost state like New Jersey. A recent study found that there are counties in New Jersey where the average meal cost is up to 63 percent greater than the SNAP benefit.

2. It Would Benefit New Jersey’s Economy

Restoring the Heat and Eat program would bring up to $50 in benefits for every dollar invested. Continuing to opt out makes no economic sense. If the state spends about $3 million to increase its annual energy assistance payment to $21 per household, it would generate up to $150 million in new SNAP benefits. The impact on the state’s economy, however, would be even greater because every dollar of SNAP benefits generates almost twice that in economic activity. Thus, restoring Heat and Eat would increase economic activity by up to $260 million, thereby creating many jobs.

3. It Would Increase Sorely Needed State Tax Revenues

Restoring the Heat and Eat program would also increase state tax revenues at a time when New Jersey is once again struggling to balance its budget. While groceries are not taxed in New Jersey, many other items are. If benefits increase, New Jerseyans who rely on SNAP would spend more on other taxable goods instead of food.

4. Most of the Other States That Had Heat and Eat Programs Have Already Restored Them

Fifteen states and the District of Columbia were affected by the Heat and Eat provision in the 2014 Farm bill; nine of them have already restored their programs by increasing their energy assistance payment – including New Jersey’s neighbors New York and Pennsylvania. Most of them restored their programs soon after the federal Farm bill was enacted to avoid unnecessary hunger and realize greater economic gains. It’s time that New Jersey finally join them.

Governor Takes Important Step on Tax Subsidy Evaluation

Posted on by Jon Whiten

Gov. Murphy took an important step toward righting New Jersey’s economic-development ship with today’s executive order calling for a robust, independent evaluation of the state’s use and abuse of corporate tax breaks. As we’ve often noted, better evaluation is a critical part of comprehensive comprehensive subsidy reforms that can usher in amore responsible approach to economic development in the Garden State.

Since 2010 – and in particular since 2013 – New Jersey has seen an unprecedented surge in corporate tax subsidies, further cramping New Jersey’s ability to fund schools, transportation and other investments known to be greater drivers of job creation. The state has rapidly increased the amount of special tax breaks approved, more of these subsidies have been used to merely shift jobs around the state, and the breaks to individual corporations have become larger and larger even as the required investments from those corporations have gotten smaller and smaller.

A new direction is urgently needed, because the state can’t afford this subsidy largesse – both in terms of its direct, long-term drain on the state’s coffers and in terms of the opportunity costs created by having such a lopsided and flawed economic-development strategy.

New Jersey can’t afford to ink over $1 billion in subsidy deals every single year, or to continue approving 9-figure tax breaks to help profitable multinational corporations move their offices a few miles down the road with a new building fully paid for by the state’s taxpayers, or to continue expanding these programs without end.

New Jersey’s tax breaks must be smaller, smarter and more targeted to small, growing businesses located in places with access to public transit. We’re glad the governor is taking this essential first step to require rigorous evaluation so early in his tenure. And we look forward to working with him, his administration, members of the legislature and agency officials to retooling these subsidies and making New Jersey truly competitive in a 21st century economy.

NJPP’s reform agenda for corporate tax breaks

Better evaluation of the state’s corporate tax subsidies is one of ten key reforms proposed by NJPP in May 2017 – others include restoring spending caps on these programs, limiting the use of breaks for jobs already in the state, and restricting the ability of corporations to redeem more in tax credits than they owe in taxes. For the full report, click here: https://www.njpp.org/budget/its-time-for-new-jersey-to-rebalance-the-economic-development-scales

New Jersey’s subsidy surge, by the numbers (figures are through the EDA’s January 2018 meeting):

  • ​5: Number of years in a row (2013-2017) that New Jersey has approved more than $1 billion in tax subsidies
  • 0: Number of times an annual report evaluating the efficacy and fiscal impact of these subsidies, mandated under a 2007 law, has been produced
  • $8.4 billion: Total amount of tax breaks approved since January 2010 (a monthly rate of $87 million)
  • $1.2 billion: Total amount of tax breaks approved during the entire previous decade (Jan. 2000-Dec. 2009) (a monthly rate of $10 million)
  • $61,000: Taxpayer cost per subsidized job since January 2010 ($117,000 per “new” job)
  • $16,000: Taxpayer cost per subsidized job in the 2000s ($22,000 per “new” job)

New Jersey Workers Could Lose $120M a Year in Tips Under Trump Proposal

Posted on by Brandon McKoy

This blog post originally had the annual lost wages at $21 million. The error was corrected and the post updated on January 24.

New Jersey workers stand to lose $120 million in tips a year under a proposed federal Department of Labor (DOL) rule making it legal for employers to pocket their workers’ tips as long as they pay those workers the minimum wage, according to a new report released this week by the Economic Policy Institute (EPI).

This is the 13th highest dollar amount of all 50 states.

The proposed “tip-stealing” rule, which was unveiled in December, rescinds portions of longstanding DOL regulations that prohibit employers from taking tips. If the rule is finalized, workers across the country will lose $5.8 billion in tips every year, according to EPI’s estimates. Women – who are more likely than men to work for tips and to earn lower wages when doing so – will be harmed the most, losing a full 80 percent of that $5.8 billion.

This new rule opens the door to further exploitation of tipped workers, who are already among the most vulnerable employees in today’s workforce. Tips are meant to be a supplement to earnings that recognize quality service. Allowing employers to withhold tips earned by their employees is wrong and invites behavior tantamount to wage theft.

New Jersey has an estimated 140,000 tipped workers, and these workers are more likely than non-tipped workers to live in poor households and lack any type of health insurance. (For more background on tipped workers in New Jersey, see NJPP’s 2014 report: http://www.njpp.org/assets/reports/NJPPtippedminimumJuly2014.pdf).

Newark Makes Amazon Shortlist, Rejects Records Request for 'HQ2' Bid

Posted on by Jon Whiten

We’re glad to see Newark on Amazon’s short list for its new headquarters, as we’ve said all along that New Jersey’s largest city would make a prime location for the company’s HQ2 project. But we remain wary of the steep price tag for taxpayers that state and local lawmakers have already put on this project. By putting at least $5 billion, and potentially several billion dollars more, in taxpayer dollars on the table so early in the game, New Jersey has ensured that is returns will be minimized if Amazon were to ultimately choose the state.

For New Jersey’s economy to be truly competitive and strong, the state needs to get back to basics: investing in the assets that give us an edge. Whether that’s ensuring NJ Transit is reliable and affordable, strengthening the state’s public colleges and universities, or fostering smart, dense growth in walkable downtowns with more affordable places to live, these are the policy solutions New Jersey should have prioritized in its efforts to woo Amazon. Merely blowing the lid off already out-of-control corporate tax break policies comes at a hefty price tag for New Jersey’s future.

Meanwhile, the city of Newark on Friday denied a public records request for its bid aimed at luring Amazon’s second headquarters to the city, suggesting that doing so would “provide competing cities with an advantage in the competition” to secure the Amazon project. It inexplicably took the city nearly 11 weeks to reject the records request, which was filed by New Jersey Policy Perspective on October 30 of last year.

This rejection is despite the fact that an estimated $2 billion in Newark city taxpayer dollars, and at least $3 billion in state taxpayer dollars, are being offered as bait to lure Amazon’s “HQ2” in this expensive race to the bottom.

Across the country, cities and states are hiding behind a variety of legal barriers in order to keep their subsidy-fueled bids for Amazon’s new headquarters secret. In New Jersey, with so much taxpayer money at stake, lawmakers and economic-development officials should be erring on the side of transparency and open government, not legal technicalities.

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