Topic Category: Economic Justice

Social Equity Excise Fee Revenue Distribution Must Center Racial Justice

Posted on by Marleina Ubel

Good evening, Chairwoman Houenou, Vice-Chairman Delgado, and Commissioners of the Cannabis Regulatory Commission. Thank you for this opportunity to share my testimony.

My name is Marleina Ubel and I am a policy analyst at New Jersey Policy Perspective (NJPP), a nonpartisan think tank focused on advancing economic, social, and racial justice for New Jersey residents.

I want to start by thanking you for your recommendations from last year. It is clear that you heard the call to make sure that the money from the Social Equity Excise Fee be distributed back not just into municipalities, but into communities harmed by the War on Drugs and not spent on law enforcement.

The language surrounding the use of this revenue is vague, allowing the state to exercise tremendous discretion in how it’s spent. Therefore, there must be clear parameters on what is acceptable and what is not, along with the expectation that a participatory budgeting process must be followed. This is of utmost importance because the communities and the individuals who have been directly impacted by the drug war must have meaningful input on how the money is used.

Meaningful input also requires transparency. The public should have access to how much revenue is raised and where that revenue is going. This should not be a slush fund, nor should it be spent on coercive treatment, school resource officers, or otherwise invested in punitive measures connected to the criminal legal system, which is the very entity that caused the most harm enforcing cannabis prohibition.

As you outlined in your prior recommendations, revenue from the Social Equity Excise Fee should go directly toward promoting stronger, safer, and more resilient communities, as well as services that recognize substance use as a matter of public health. Examples of such investments include: recreation and community programming, harm reduction services, neighborhood restoration, after-school programming, and vouchers or direct payments for individual needs, such as utilities, rent, or medical costs.

New Jersey has an obligation to equitably invest this revenue, meaning they must center racial justice and reparations for people harmed by the War on Drugs. Anything less would fail the very communities and residents that the Social Equity Excise Fee is intended to support.

Thank you.

Biden Student Debt Proposal Will Help New Jersey Families But Needs to Go Farther for Maximum Relief

Posted on by Nicole Rodriguez

Today, President Biden announced that borrowers earning up to $125,000 in income will be eligible for student loan debt relief of up to $10,000, or up to $20,000 for Pell Grant recipients. For a state with over 1.3 million student loan borrowers with an average balance of $37,000, this will be life-changing debt relief. New Jersey ranks 6th in the nation in the percentage of undergraduate students receiving Pell Grants – almost 39 percent of undergraduates. In response to today’s announcement, New Jersey Policy Perspective (NJPP) releases the following statement.

Nicole Rodriguez, President, NJPP:

“The President’s plan to forgive student loan debt will provide hundreds of thousands of New Jerseyans relief, allowing them to invest in their futures and families while bolstering the state’s economy. Canceling student loan debt is a critical step to building wealth and economic prosperity in New Jersey while narrowing the racial wealth gap. Higher education is held up as a ladder of opportunity to success, but the explosive growth in student debt holds back borrowers from achieving their full potential.

“While this plan will provide transformative relief to some borrowers, it does not go far enough. Capping income levels will not only leave many borrowers behind but require an entire apparatus of applications and red tape when the federal government could have canceled this debt with the push of a button. And the $10,000 does not come close to covering the average balance of nearly $40,000 for the average New Jersey borrower. Beyond the debt relief itself, more must be done to ensure adequate public funding for higher education: No student should have to take on crushing debt to pursue higher education.”

 
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New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that drives policy change to advance economic, social, and racial justice through evidence-based, independent research, analysis, and advocacy.

Common Sense Changes to the Tax Code Will Narrow Wealth Inequities

Posted on by Sheila Reynertson

New Jersey Policy Perspective (NJPP) is committed to closing the racial wealth gap through statewide policies that build and share wealth equitably. As a nonpartisan think tank that drives policy change to advance economic, social, and racial justice, NJPP has identified key policies that will begin to repair the harms of centuries of discrimination and exploitation.

1. Fair and Just Taxation

The most effective tool in equalizing wealth disparities is taxation aimed at the very wealthiest individuals and corporations. Fair and just taxation of existing wealth serves two critical goals: It ensures that people who have extracted the most value from the state’s economic system pay what they owe, and it ensures that the government has the resources it needs to support programs that advance wealth-building and human capital.

NJPP recommends three immediate commonsense changes to the tax code that will narrow wealth disparities:

  • Extend the Corporate Business Tax (CBT) surcharge on profits over $1 million. Corporate earnings over $1 million in New Jersey have been subject to a surtax since 2018. Because it only applies to very wealthy corporations, the surtax ensures that a portion of record-breaking profits benefits everyone. Scheduled to expire at the end of 2023, the surtax should instead be made permanent, turning huge corporate profits into publicly shared support and services.
  • Reform the inheritance tax to make it progressive. Lightly-tax and tax-free transfers of wealth at death widen the racial wealth gap. For example, in 2019, 30 percent of white households received an average inheritance of about $200,000, while only 10 percent of Black households received one which, on average, was half the amount. Worse, New Jersey’s mostly flat tax on inheritances over a certain amount leads to these smaller inheritances being taxed at roughly the same rate as multimillion dollar transfers. To reduce the transfer of concentrated wealth, NJPP proposes expanding the tax to direct heirs and, to make it more progressive, lifting the exemption for smaller inheritances up to $1 million.
  • Close corporate loopholes to treat all businesses fairly. New Jersey’s combined-reporting law has a big loophole that allows wealthy multistate corporations to transfer their profits out of New Jersey to other states or countries with low or no corporate taxes. Fixing this and other remaining flaws will stop corporations with deep pockets, like Amazon and Walmart, from taking advantage of tax avoidance schemes that reduce what they owe and rob the state of resources needed to strengthen everyone’s ability to build wealth.

 

These tax policies are only the start. NJPP has other progressive proposals that end preferential tax breaks and target wealth held by the most affluent members of society, like the restoration of the estate tax and strengthening how New Jersey taxes capital gains income, among others.

At its root, taxation is the single most powerful tool to equalize wealth disparities. No doubt these hearings will include many proposals for outstanding and innovative programs: baby bonds, home buying assistance, guaranteed income. But to fund these programs at the level needed to meaningfully close the state’s substantial wealth disparities, New Jersey will need to simultaneously pursue fair taxation of the state’s wealthiest individuals and corporations.

2. Affordable for All: Putting Money in Families’ Pockets

A perpetual obstacle to wealth-building among low- and middle-income households are the day-in, day-out expenses and surprise costs, such as medical emergencies or a car repair. Accumulating wealth is nearly impossible for families who must dip into savings or take additional debt simply to make ends meet.

NJPP supports any policy that puts cash back in the pockets of low- and middle-income households to help ease the pain of these expenses and begin to build savings:

  • Expand the Child Tax Credit. New Jersey has created its first state-level Child Tax Credit, but at $500 per child under age 6 for households earning less than $30,000 annually, this does not come close to meeting the high cost of child-rearing. Raising the credit from $500 to at least $1,000 would defray these costs, as would expanding the credit to families with children age 6 and older.
  • Expand the Earned Income Tax Credit (EITC). The EITC is a powerful anti-poverty tool, but many New Jerseyans who pay into the tax system don’t get the benefit of the EITC because they lack a Social Security number. Including ITIN-holders would advance equity among all New Jersey families living paycheck to paycheck.
  • Reform WorkFirst NJ. New Jersey’s assistance program for very low-income residents is in immediate need of reform to keep households stable and move them out of poverty. Increasing the benefit amount and ending policies that trap households in a cycle of poverty will change lives, especially the lives of children.

 

Cash in families’ pockets acts as an income support first and foremost. But absent sufficient financial resources to make ends meet, no household can effectively begin building wealth in the first place.

3. Innovative Wealth-Building Programs

Existing asset-building programs have thus far failed to build the base of wealth necessary to begin closing the wealth gap. Indeed, many programs and tax structures have instead widened the gap, by providing disproportionate benefits to the already-wealthy.

NJPP proposes these creative solutions to explicitly build wealth in households that have been left behind for far too long:

  • Pay reparations for tangible harms of slavery and racial discrimination. Direct payments to Black communities harmed by the American slave trade, as well as discriminatory practices such as redlining, segregation and employment discrimination, would directly close the racial wealth gap. NJPP supports legislation to create a task force on reparations to Black residents.
  • Fund robust baby bonds programs. Connecticut and Washington, DC have passed baby bonds legislation, which funds savings accounts for all births covered by their Medicaid programs. These accounts receive additional contributions from the state before the bonds and children reach maturity. Such a program would help close the wealth gap for children and young adults by giving families an opportunity to build assets without dipping into savings or going into debt.

 

NJPP supports a broad array of proposals to reduce wealth inequality in New Jersey, but real change comes down to appropriately taxing the obscene accumulation of wealth by the top one percent of individuals and corporations, while building assets and reducing deprivation for working-class families.

Thank you.

Reevaluation of Fines and Fees in the Criminal Legal System is Essential to Reducing Wealth Inequality

Posted on by Marleina Ubel

Good evening. Thank you for the opportunity to testify. My name is Marleina Ubel and I am a policy analyst at New Jersey Policy Perspective (NJPP), a nonpartisan think tank focused on advancing economic, racial, and social justice for New Jersey residents.

The criminal justice system creates and exacerbates racial wealth gaps. Mass incarceration and its disparate application to Black and Hispanic/Latinx communities has reduced their earnings potential, employment opportunities, and wealth accumulation. However, my focus today will be on monetary fines and fees, which can turn minor offenses into massive and long-lasting disparities, especially for people already in dire economic circumstances.

A brief overview of the terminology: fines and fees, or monetary sanctions, are costs imposed by the courts. Fines are meant to serve as a punishment, such as a ticket for jaywalking, while fees are meant to pay for the day-to-day operations of the criminal justice system. Often, when one is charged with a fine, they also are charged with a fee. However, for a person with outstanding fines or fees, the effect is the same — an amount owed that they likely cannot pay, which can balloon into substantial economic hardship down the road. A recent study showed that Black and Hispanic/Latinx defendants spent more time in the court system before disposition and owed more fines and fees 90 days after disposition than white defendants with similar charges.[i]

Let me illustrate how broken the system of fines and fees is with a fairly commonplace criminal justice system interaction: When a person is accused of a crime but can’t afford their own attorney, they are entitled to representation by a public defender. But in New Jersey, this is not free — despite the defendant having to demonstrate financial indigence to qualify for the service. State law requires that the public defender’s office bill defendants a minimum of $150.[ii] Within six months of disposition of the case, the defendant must pay the bill or be in debt to the State of New Jersey.[iii]

This applies to municipal public defenders for municipal offenses, meaning that even low-level municipal offenses can result in liens placed on low-income defendants, yet another drag on ability to build wealth, even if the charges are dismissed or other fines and fees are successfully paid.[iv]

And, while these costs do not appear enormous, roughly one-third of American adults cannot cover a $400 expense without going into debt or selling assets.[v]

Although steps have been taken by the Legislature, judiciary, and the Attorney General to reduce the impact of these fines and fees on individuals, the reality is that even cursory interaction with criminal courts can result in charges that hamper wealth accumulation. Getting a lawyer, obtaining court documents pertaining to one’s own case, and applying for expungement of one’s record all come with costs that low-income individuals are unlikely to afford.

NJPP recommends eliminating all public defender fees and funding residents’ constitutional right to an attorney through sustainable public funding. Neighboring states like New York and Pennsylvania do not charge for legal representation and neither should we.[vi]

However, beyond these fees, NJPP recommends a wholesale reevaluation of fines and fees across the criminal legal system, in line with recent legislation that heavily reduces or eliminates juvenile-justice-related fees.[vii] The vicious cycle of fines and fees, inability to pay, and subsequent increased interaction with police and courts — leading to lost work time, drained savings, and of course, additional fines and fees — must be broken to reduce wealth inequality in New Jersey.

End Notes

[i] Lindsay Bing et al., Incomparable Punishments: How Economic Inequality Contributes to the Disparate Impact of Legal Fines and Fees, RSF: The Russell Sage Foundation Journal of the Social Sciences January 2022, 8 (2) 118-136. https://www.rsfjournal.org/content/8/2/118

[ii] N.J. Admin. Code Sec. 17:39-3.1

[iii] N.J. Stat. Sec. 2A:158A-17

[iv] N.J. Stat. Sec. 2B:24-13

[v] See Board of Governors of the Federal Reserve System, Economic Well-Being of U.S. Households in 2021 (May 2022),  p. 35-36.

[vi] Marea Beeman et al., National Legal Aid and Defender Association, At What Cost? Findings from an Examination into the Imposition of Public Defense System Fees (July 2022), tbl. 2 at p. 15, https://www.nlada.org/sites/default/files/NLADA_At_What_Cost.pdf?v=2.0

[vii] P.L. 2021, c.342.

It’s Time for New Jersey to Fix WorkFirst NJ to Better Support Low-Income Families

Posted on by Brittany Holom-Trundy

Good afternoon Chairman Vitale and members of the Committee. Thank you for this opportunity to provide my testimony on the proposed Work First New Jersey (WFNJ) reforms. My name is Dr. Brittany Holom-Trundy, and I am a senior policy analyst at New Jersey Policy Perspective (NJPP). NJPP is a non-partisan, non-profit research institution that focuses on policies that can improve the lives of low- and middle-income people, strengthen our state’s economy, and enhance the quality of life in New Jersey.

NJPP strongly supports the changes proposed in S1642. We believe that the comprehensive reforms proposed in this bill are a good step toward a WFNJ that more effectively tackles childhood poverty, helps support low-income families, and builds a stronger, more equitable future for the state.

New Jerseyans need these changes now, as the program’s structure falls short of effectively addressing poverty. As of February 2022, fewer than 10,000 — only 9,976 — families were participating in TANF. This means that TANF is supporting fewer than one in six New Jersey families in poverty. And this number has only fallen over the past two and a half decades since the last major reform at the federal level.

WFNJ falls short not only in the number of residents it serves, but in how it serves them. Administrative barriers arbitrarily limit assistance, and even those who receive that assistance do not get enough to make ends meet. Monthly cash benefits in the program remain at less than ⅓ of the Federal Poverty Level, meaning that cash assistance now has only a quarter of the strength relative to federal poverty levels than the cash assistance that was provided in the 1970s. Benefit cliffs and inadequate off-ramps for the program leave families hanging, facing the reality that working full time in a minimum wage job in New Jersey today will still leave a parent with two children below the federal poverty level…And this does not even take into account that the federal poverty level is tens of thousands of dollars below estimates of what it takes to pay monthly food, utility, housing, and other necessary bills in New Jersey. All of these problematic limitations of the program leave families with an inability to save, to prepare for unexpected expenses, and to ultimately break free from the cycle of poverty.

This bill advances comprehensive reforms to address many of these shortcomings. By increasing the monthly grant (benefit) amount to at least 50% FPL with automatic cost of living adjustments, improving off-ramps, modifying work requirements to better meet realities for working parents, and making other important changes to rules that bring the program into the 21st century, we can make the WFNJ program truly work for New Jerseyans.

We hope that the committee will advance these reforms today. Now more than ever New Jersey’s parents and children need commitments from our state leaders to support their well-being and a brighter future.

Thank you for your time.

Without Transparency, New Jersey Risks Spending ARP Funds in Ways That Don’t Provide True Relief

Posted on by Sheila Reynertson

If used as intended by the Biden administration, the state fiscal recovery funds granted to New Jersey through the American Rescue Plan Act (ARP) offer a once-in-a-lifetime chance to advance racial equity by investing in communities that were hardest hit by the pandemic and historically left behind in the lawmaking process. Yet, despite repeated calls from policy experts, community leaders, and advocates to prioritize disproportionately harmed residents, elected leaders have failed to deliver adequate direct relief to those who need it most.

With less than $1 billion remaining, New Jersey’s unique opportunity to provide immediate and meaningful relief to these families and communities is quickly slipping away. As Governor Murphy and lawmakers decide how to use the remaining funds, let’s not forget the “Rescue” in the American Rescue Plan. There are a lot of workers and families still struggling who would benefit from:

  • Direct relief for immigrant workers
  • Hazard pay for essential workers
  • Rental assistance for those facing eviction
  • Cash assistance for residents who maxed out their TANF benefits

Transparency Not Treated as a Priority

Based on current, available documentation, each new allocation of ARP funds in the latest budget lacks any kind of description, meaning there is no way to tell who exactly benefits from hundreds of millions of dollars’ worth of spending. For example, lawmakers allocated $300 million to water infrastructure, but without basic details it’s unclear which communities will benefit and which will be left behind.

In other cases, the allocation goes to a new or existing program that will require ongoing funding, drawing into question the state’s commitment toward its success once the federal funds are gone. Case in point: The state’s only public hospital received $50 million for a building assessment plan, but with no guarantee that the plan will be implemented.

The lack of information on ARP allocations also calls into question whether some of these investments were necessary at all — especially for funds sent to private institutions that should have plenty of resources to cover the costs themselves. For example, $13 million has been granted to two health systems for “hospital infrastructure” and workforce education.

The truth is: we’re nervous.

Despite ongoing requests to address the harms of the pandemic itself and the economic and social aftermath, the transparency with which final decisions are made has been dismal. The public, in fact, has not been granted a meaningful process by which to weigh in on how the remaining dollars are spent and, based on the uneven quality of issuances so far, that must change.

Lawmakers can start by allowing public testimony at future JBOC hearings — consistent with most other legislative committee hearings — so that policy experts, essential workers, and community leaders alike can weigh in on ARP spending proposals before they’re approved.

Thank you.

How the New Jersey Child Tax Credit Became Law

Posted on by NJPP Staff

When Governor Murphy signed the new state budget into law, New Jersey became the latest state with its own Child Tax Credit. Modeled on the highly successful federal Child Tax Credit expansion, the new program will provide eligible families with up to $500 per child under 6 years old.

Below, NJPP Senior Policy Analyst Peter Chen explains how the Child Tax Credit went from a proposal in an NJPP report published in February to a part of the budget deal between legislative leaders and the governor.

NJPP Senior Policy Analyst Peter Chen (@ptrchn1):

 

Backroom Budget Deals Hurt Residents Who Need Help The Most

Posted on by NJPP Staff

Labor unions, faith leaders, essential workers, and advocates for immigrants’ rights, housing, and the environment panned the newly approved state budget as a missed opportunity to provide transformative relief to working families who need the most help. With billions of dollars in surplus and federal aid, the state budget was crafted behind closed doors, shut members of the public out of the process, and, as a result, left out important investments that would have benefited low-paid workers and their families.

When billions of dollars in funding are negotiated away from the public eye, it’s inevitably the public who loses out. The hard-working New Jerseyans who are struggling the most with rising prices, rent, and inflation do not have highly-paid lobbyists and special-interest dollars to fight for them. This budget could have made New Jersey affordable for all, but instead directed the state’s record-setting surplus towards tax relief for wealthy homeowners, corporations, and a gimmicky sales tax holiday.

Although there are many important and much-needed investments in the budget, a lack of transparency and accountability for the way public money is spent leads to worse outcomes for the people who have the least. Notably, the budget lacks proposals to expand safety net programs, tax credits, and assistance to those with the lowest incomes: Cash assistance in Temporary Assistance for Needy Families (TANF), the Earned Income Tax Credit (EITC), the Excluded New Jerseyans Fund, and hazard pay for essential workers.

Nicole Rodriguez, President, New Jersey Policy Perspective (NJPP):
“New Jersey’s working-class residents, immigrant families, and essential workers have faced serious economic challenges since the pandemic, and this budget should have been the prime opportunity to support them with direct relief. Instead, their voices were shut out of the budget process, while behind-the-scenes deals secured hundreds of millions in pet projects and corporate giveaways. With a growing and diverse population, New Jersey should not be a state where a few powerful people make decisions that affect the many without taking their voices into account.”

Rev. Sara Lilja, Executive Director, Lutherans Engaging in Advocacy Ministry:
“The bible teaches us that where your treasure is, there your heart is also. This budget reveals that our heart does not regard low and working families as essential. It is often said that budgets are moral documents; this budget does not align with a morality that is committed to supporting the hundreds of thousands of essential working families that are the economic engine of our state. Morally, our state budget should be for the many, not just the powerful elite.”

Laura Bustamante, Policy and Campaigns Manager, New Jersey Alliance for Immigrant Justice:
“It has been our immigrant workers who have helped us survive through this pandemic. There is still no meaningful or permanent relief for those who continue to put their lives at risk and have been excluded from aid. Essential workers have put their lives at risk and on the line day in and day out and today the legislature turned their backs on immigrant families and working people. The State needs to do more for those who risk their lives everyday.”

Marcia Marley, President, BlueWaveNJ:
“I applaud this budget for its commitment to housing, education, reproductive health, and the new Child Tax Credit. Unfortunately, it leaves out many working families, like those from our immigrant community, misses an opportunity to address the racial wealth gap, and is not bold enough on transit and infrastructure issues where we continue to ignore the need for dedicated funds.”

Kevin Brown, Executive Vice President and NJ State Director, SEIU 32BJ:
“We are disappointed to have to write these words again, but on behalf of our 13,000 hardworking SEIU 32BJ members living and working in New Jersey, we strongly and unequivocally condemn the lack of public transparency around this year’s budget process. Working families deserved a voice in the allocation of the budget’s historic surplus, which presented an unprecedented opportunity to improve affordability and level the playing field for the middle class and low wage workers. While we applaud the Legislature for expanding the Child Tax Credit, there is so much more they could have done to transform the lives of essential workers in our state during an unprecedented time of massive budget surpluses.”

Julie Larrea Borst, Executive Director, Save Our Schools NJ Community Organizing:
“Save Our Schools NJ applauds the continued steps toward fully funding our K-12 schools and the expansion of preschool. We are disappointed that the state’s huge budget surplus was not used to restore funding to S2 districts and that the funding allocated for the Schools Development Authority fell far short of what is needed for school construction and repairs in our most impoverished school districts. If we cannot meet these needs now, when the budget is abundant, then when can the Legislature step up and do the right thing?”

Banessa Quiroga, member of Make the Road New Jersey:
“This budget is a missed opportunity for essential workers like me and for immigrants across New Jersey. The Legislature has failed to fund the Excluded New Jerseyans Fund or hazard pay, and left out key, bi-partisan measures like the Earned Income Tax Credit expansion. These measures would have helped my family make ends meet in a time of unprecedented inflation and skyrocketing rents. Instead, the budget rewards upper middle class homeowners with tax breaks.”

Debra Coyle, Executive Director, NJ Work Environment Council:
“Unfortunately, once again the Legislature has chosen to have an opaque budget process, entirely completed in the private backrooms of Trenton, that intentionally excluded the voices of New Jersey citizens and advocates. This is the largest budget in the state’s history and it presented enormous opportunity to address so many issues faced by every day New Jerseyans, but instead they decided to forge ahead with a broken process where no one even saw the budget until after it was voted on in committee and gave no real opportunity for public input.”Barbara Rosen, RN and First Vice President, HPAE:
“HPAE nurses and health care workers argued for, lobbied and, ultimately, challenged Gov. Phil Murphy and state legislators to adequately fund the operation of New Jersey’s only public hospital by raising the annual budget allocation for University Hospital in Newark to $151.1 million. Unfortunately, the 2023 Fiscal Year budget calls for just $44.7 million for University Hospital in Newark. This does not meet the needs of patients, workers and the community served by the hospital. This allocation is a profound missed opportunity at a time when the state has actual resources to put its money where its mouth is. University Hospital in Newark is committed to continuing as an anchor institution in the municipality and the Northern New Jersey region. In addition to the crucial, direct patient care that UH provides, it has a vital and unrivaled role as a public health institution in the state.”Joe Marchica, Our Revolution Trenton Mercer Chapter Chair and OR New Jersey Member:
“Yet again, our legislature drops a complex budget document on representatives, advocacy groups, and the public with next to no time for us to properly analyze and assess the most important piece of legislation in New Jersey each year. This budget mostly ignores the opportunity and necessity to invest in our people. It prioritizes the interests of the wealthy, instead of the programs needed to establish and maintain an economy that works for all of us. We do, however, applaud one notable exception to this: the inclusion of a Child Tax Credit, which is a bright spot in an otherwise gray budget.”Latino Action Network:
“Given unexpected tax revenues, the state of New Jersey was uniquely positioned to invest in and care for the communities who were hardest hit during this pandemic – the working class, communities of color, and Immigrant New Jerseyans. Instead, politicians ignored transparency and have continued to leave out budget reforms which could improve the lives of millions of New Jerseyans. New Jersey’s leadership cannot continue to tout New Jersey’s diversity and multiculturalism on the one hand and do little to materially support our communities on the other. It’s high time to create budgets that center the most marginalized.”

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For The Many is a statewide coalition of more than 30 organizations working collectively to expand funding for essential services and improve budget practices to adequately meet current and future needs, especially for communities that have been historically marginalized.

Sales Tax Holidays Do Little to Ease the Burden on Working Families

Posted on by Sheila Reynertson

Good afternoon, Chair Sarlo, and members of the committee.

Sales tax holidays have a long track record of being untargeted, complicated, expensive, and easy to exploit, all while being inconsistent drivers of economic activity. If the goal of this legislation is to get money into the hands of working families with children, as well as educators and school districts, the straightforward approach would be to cut them a check through an appropriation, not a tax holiday that will disproportionately benefit wealthier families.

New Jersey Policy Perspective opposes this legislation in favor of fairer and more effective changes to the state tax code that make life more affordable for families.

Untargeted: By spreading the benefit over all residents, S-2914 fails to assist the low-paid and working-class families who need the most help. Wealthier residents are better able to schedule their spending for the holiday window, and when sales tax rates decrease — whether in the short-term or long-term — higher-income residents receive the bulk of the benefit because they tend to spend more. As a response to inflation, this also misses the mark. Lower-income residents’ budgets are more likely to have a higher percentage dedicated to inflation-sensitive categories like food, rent, and utilities — all areas outside the school supplies targeted by this tax holiday.

Complicated: The list of eligible goods captures a diverse but specific array of items. For merchants, administering this list for a short timeframe will add unnecessary burden by inserting them as middlemen, rather than giving direct aid to families.

Expensive: S-2914 does not include a budget estimate, but sales tax holidays have a history of causing substantial reductions in state revenues. Last year, sales tax holidays cost state and local governments more than $550 million nationally. This year, that number looks to grow even more.

Easy to exploit: Research shows that merchants raise their prices during sales tax holidays because there is no provision preventing them from doing so, reducing the benefit for consumers. Additionally, without distinguishing between online and in-person sales, S-2914 does not even ensure that the generated business will flow into local small businesses and communities, rather than Amazon’s corporate pockets.

Instead of one-off gimmicks that fail to make New Jersey more affordable, the budget should instead include strong investments in families and children, as well as sufficient school funding to allow them to purchase the supplies they need. I encourage committee members to vote no on this bill.

Thank you.

A State-Level Child Tax Credit Would Make New Jersey More Affordable for Working Families

Posted on by Peter Chen

Good afternoon, Chair Sarlo, and members of the committee. Thank you for the opportunity to testify today.

One in 10 New Jersey children live in poverty, an appalling figure for one of the country’s wealthiest states. That rate is even higher for the state’s youngest children, with families fighting each day to meet the high cost of raising children in the state.

The bill before you today creating a state-level Child Tax Credit shows a new way forward, sending money directly to families to help alleviate these costs. As the expanded federal Child Tax Credit demonstrated, sending direct payments to families with children can reduce poverty, improve food security, and keep family finances stable through rocky economic times.

With those tough times on the horizon, and inaction from Congress on extending the federal Child Tax Credit, now is the time for New Jersey to join states like New Mexico, Vermont, and Minnesota in creating a state-level Child Tax Credit to assist families this year and for years to come. Although this $500 credit is not going to cure child poverty, it will make life a little easier for families of young children.

By covering households earning up to $80,000, the proposed credit would ensure that support goes to families who need it most, benefitting around 250,000 households and more than 400,000 children.

A state-level Child Tax Credit is a critical step in making New Jersey affordable for all. I urge the committee to consider bills that, like the Child Tax Credit, assist working families become financially secure, including expansion of the Earned Income Tax Credit (S-2458) and WorkFirst New Jersey reforms (S-1642).

Thank you.

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