Support Young Workers by Expanding the EITC

Testimony by NJPP Policy Analyst Vineeta Kapahi in support of expanding the Earned Income Tax Credit (EITC) to young adults.

Published on Sep 22, 2020 in Economic Justice

The following testimony, on A838, was delivered to the Assembly Budget Committee on September 22, 2020.

Good afternoon Chairwoman Pintor Marin and members of the committee. My name is Vineeta Kapahi and I am a policy analyst at New Jersey Policy Perspective (NJPP), a non-partisan, non-profit research institution that focuses on policies affecting low-to-moderate income people in New Jersey. Thank you for the opportunity to submit testimony on this important issue.

NJPP supports A838, which lowers the minimum age limit for the New Jersey Earned Income Tax Credit (NJ EITC) for workers without qualifying children.

The Earned Income Tax Credit (EITC), a refundable tax credit for low- and moderate- income working individuals and families, has long been a successful tool for reducing poverty, promoting economic security, and improving quality of life for working families. By boosting the wages of low paid workers, the EITC helps New Jerseyans better afford their basic needs, improves health and educational outcomes, and strengthens state and local economies.

Due to the EITC’s narrow eligibility requirements, however, far too many New Jersey residents miss out on this important resource. Eligibility for the credit depends on several factors, including income, family type and size, immigration status, and residence. For workers without children at home, eligibility is also tied to age – workers who do not claim children as dependents only qualify for the credit if they are between the ages of 25 and 64.

While EITC eligibility criteria are based on the assumption that workers under 25 are dependent on their parents, the reality is that many young New Jersey workers are financially independent or even support their families. By lowering the minimum EITC eligibility age for workers without qualifying children, the proposed legislation would provide a much-needed boost and stronger foundation for young adults as they begin their careers.

Several other states have recently taken steps to address barriers to the EITC by making targeted changes to eligibility rules. In 2017, for example, Minnesota decreased the minimum age for workers without qualifying children from 25 to 21. In 2018, California expanded its state EITC to childless workers between the ages of 18 and 24, and Maryland eliminated the minimum age requirement for its state EITC altogether.

By passing A838, New Jersey could join states that have expanded the impact of their EITC programs. New Jersey could further strengthen its EITC beyond the present bill through additional measures, including eliminating the upper and lower age caps for workers without qualifying children, increasing the credit amount for childless workers, and extending the credit to ITIN filers. Removing barriers to the EITC would not help households who need support, but would also strengthen the broader New Jersey economy. As recipients of the EITC use the credit to meet short- and medium- term needs, such as transportation, household supplies, and utility bills, expanding eligibility would increase economic activity and support businesses.

In light of the current health and economic crises, it is more important than ever for New Jersey to invest in tools that directly support workers and strengthen the state’s recovery. I urge you to take a step toward eliminating barriers to economic justice by swiftly passing A838.

Thank you for your time and attention.

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