Topic Category: Economic Justice

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.

New Jersey Should Join Other States and Create a Child Tax Credit

Posted on by Peter Chen

Child Tax Credits give households money back on their tax returns to cover the high cost of raising kids and make life more affordable for families, as NJPP’s report on a state Child Tax Credit in New Jersey shows.

So far in the 2022 budget cycle, Connecticut, New Mexico, and Vermont have created new Child Tax Credits, while states such as California, Massachusetts, New York have either expanded or proposed expansions to existing programs.

Although each program is slightly different, all use the state tax code to directly put money straight back in qualifying families’ pockets simply for having a dependent child in the appropriate age range. This series of changes point to a national movement to use budget surpluses to support families with kids and make parenting more affordable.

Refundable child tax credits have the power to: help families afford basic needs like food, housing, and utilities; promote kids’ healthy development; put money back directly into local economies.

A new proposal in the New Jersey Legislature (S-2523/A-3852) would create a state Child Tax Credit along these lines, providing families with a tax credit worth up to $500 for each child under age six for households earning up to $80,000 in income.

With the successful federal expanded Child Tax Credit now expired and any extension still in limbo, it will fall on states to rebuild the lifeline that helped so many families over the past year. New Jersey should invest its budget windfall in the families and children who represent the future of the state.

New ANCHOR Proposal is a Big Improvement, But More Needs to Be Done For Low-Income Families

Posted on by Peter Chen

Today, Governor Murphy announced a new deal with legislative leadership to expand his ANCHOR Property Tax Credit proposal, which revises and expands the Homestead Benefit. The new proposal would include roughly 300,000 more renters earning between $100,000 and $150,000 in income, and expands credit amounts for both homeowners and renters. NJPP analyzed the Governor’s previous proposal in an April 2022 report, in which it recommended more funding to go towards renters and raised concerns about credits going to high-income families. In response to the new ANCHOR proposal, New Jersey Policy Perspective (NJPP) releases the following statement.

Peter Chen, Senior Policy Analyst, NJPP:

“The new ANCHOR proposal is a big improvement over the original as it directs more relief to renters, many of whom are facing historic rent increases and risk being priced out of their homes. Renters, on average, have lower incomes and less wealth than their home-owning peers. Renters also pay property taxes indirectly through their rent, so it’s only fair that they are included in property tax relief programs like this.

“While this proposal would provide historic relief to millions of residents, more must be done to make New Jersey affordable for those struggling the most to cover everyday costs. We hope that this proposal will be paired with more relief targeted to families living below or just over the federal poverty line. With a record-breaking surplus, state lawmakers can do just that by expanding the Earned Income Tax Credit and creating a new, state-level Child Tax Credit. Targeting relief to those who need it most is the only way to make New Jersey affordable for all.”

 
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It’s Time to Hold Amazon Accountable for High Worker Injury Rates

Posted on by Nicole Rodriguez

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

I’m Nicole Rodriguez, Research Director and incoming President of New Jersey Policy Perspective (NJPP). NJPP is a nonpartisan think tank focused on state-level policies that advance economic, racial, and social justice for New Jersey residents.

All working people deserve to be safe on the job. But, as our report points out, people who work at Amazon are far too often not safe. As Amazon grows into the state’s largest private employer, the injury crisis in its facilities is accelerating. In New Jersey, the total recordable injury rate among Amazon warehouse employees was 5.8 per 100 workers in 2021 compared to 3.8 per 100 workers in 2020. This is more than a 50 percent increase.

And that’s just the tip of the iceberg — many injuries go unreported or are not investigated by OSHA.

New Jersey isn’t alone. Across the country, Amazon work is far more dangerous than work in comparable industries, as revealed by employer data reported to OSHA: Injury rates among Amazon workers nationwide were almost twice as high as the injury rate among all other warehouse employers in 2021.

What makes New Jersey unique, however, is the rate of growth of Amazon facilities and workers in the state. The number of Amazon’s New Jersey employees grew from 5,500 to 49,000, a nearly 800 percent increase, in the past five years. We are now home to 53 Amazon facilities, and there are plans to expand operations at Newark Airport.

New Jersey is fast becoming Amazon’s staging ground to build and strengthen its presence across the country. Amazon needs our public assets — our roads, highways, and ports — which unfortunately exacerbates pollution. Now they need the airport, where Amazon is trying to build an air hub without public input.

But, ultimately, they need our workers. And we need enforceable standards to protect our workers.

Good employers already provide this. But Amazon has proved over and over that it doesn’t prioritize the very workers that bring its company success.

This needs to change.

Amazon workers shouldn’t have to risk injury to help New Jersey residents receive packages rapidly.

These workers deserve passage of legislation that will mandate health and safety protections for workers. In this spirit, we recommend the following:

  1. Workers should be allowed to form health and safety committees in each worksite to create and run safety training programs as well as monitor, review, and collaborate with employers on all workplace health and safety policies. New York State passed the Health and Essential Rights Act or “Hero’s Act” in 2021, which allows for just this. Workers know best how to protect themselves, and it would benefit Amazon to listen to them.
  2. Unreasonably high productivity quotas contribute to on-the-job injuries. We need a regulatory framework that addresses harmful management practices. Workers should have the right to refuse to work if they feel unsafe, as well as protection from retaliation when raising concerns, and transparency in quotas.
  3. Finally, we should establish strong penalties and enforcement mechanisms to promote compliance. Strong enforcement levels the playing field for businesses that do comply with the law.

If the pandemic taught us anything, it is our collective responsibility to keep each other safe. Workers and good employers can’t do this alone.

Thank you for your time.

Local Government Should Not Be Funded With Fines and Fees

Posted on by Marleina Ubel

Good afternoon, Chairman Spearman and members of the Committee. Thank you for the opportunity to testify today.

I’m Marleina Ubel from New Jersey Policy Perspective (NJPP), a nonpartisan think tank focused on advancing economic, social, and racial justice for New Jersey residents, and it is in keeping with this mission that I testify in opposition to A-959.

Municipal government and services should be funded with robust, reliable, and progressive revenues, not fines and fees extracted by law enforcement or court systems. A-959 would divert funds generated by fines and fees from state coffers to the municipal government where a motor-vehicle violation happens to take place. “Taxation by citation” for local government through law-enforcement-generated fines and fees has a history of being discriminatory, falls heavily on low-income residents, and creates an unreliable source of revenue.

Motor vehicle fines and fees disproportionately fall on lower-income residents and communities of color. In the first half of 2021, Black motorists made up more than 24 percent of State Police summonses, despite making up only 13 percent of the state’s total population.

Law enforcement and government finance groups on the left, right, and center agree that funding government through motor vehicle fines and fees distorts government services and undermines public safety and public trust in law enforcement and courts.

If the goal of A-959 is to ensure appropriate funding for municipal courts, NJPP recommends robust state funding for municipal courts. As the Supreme Court Working Group on Municipal Courts report from 2019 suggests, the Legislature should focus on reducing local reliance on law-enforcement- and judicially-imposed fines and fees, rather than deepening municipal reliance on these unstable and discriminatory revenue sources.

May Day: Excessive CEO Pay Stifles Workers’ Wages

Posted on by Nicole Rodriguez

May 1 is International Workers’ Day when the historic struggles and gains made by workers are celebrated around the world. In New Jersey, we acknowledge the work of dedicated organizers and advocates who led the way to a higher minimum wage, a more robust paid family and medical leave program, an emergency fund for workers excluded from federal stimulus relief, and so much more. These important victories helped make New Jersey more affordable for working people and their families in every corner of the state.

As we look to further build worker power — and an economy that works for everyone — we cannot ignore the widening disparity between the most well-off and everyone else. That means examining the growing earning power, and plain old power, of highly profitable corporations and the executives running them.

Far too often, corporate CEOs exert their influence to hoard pay that could have gone to the very people whose labor made the company’s success possible. This shortsighted practice further drives income inequality.

In 2020, New Jersey was home to 12 of the top 350 publicly traded companies. For these companies, CEO pay far outpaced the pay of the average worker. For example, the Quest Diagnostics CEO made 485 times as much as the typical worker in Quest’s industry. Nationally, trends are similar: CEOs were paid on average 351 times the typical worker in 2020.

The large disparity between CEO pay and the average worker is relatively new. In 1965, CEOs of major U.S. companies only earned 21 times more than the average worker. This ratio spiked in the 1990s, hitting a peak in 2000 during a red-hot stock market. Though the current CEO-to-worker compensation ratio remains slightly below the peak seen two decades ago, it is far higher than it was throughout the latter half of the 20th century.

This wage gap will likely continue to widen as U.S. corporations reap record-breaking profits during the pandemic and recession, even with rising costs of inflation. All the while, many workers continue to struggle to make ends meet.

As we thank workers today, we should recognize that our entire state has benefited from their sacrifices and that corporations’ success ultimately depends on their workers.

Essential Workers, Advocates, and Policy Experts Urge Lawmakers to Spend American Rescue Plan Funds on Direct Relief for Working Families

Posted on by NJPP Staff

With more than $3 billion remaining in federal pandemic assistance — and no hearings planned on how to spend these funds — advocates and policy experts held a virtual “People’s Hearing” for members of the public to weigh in on how the federal relief should be used.

“Lawmakers may have said they’re finished with budget hearings after this week, but today’s People’s Hearing sends a clear message: New Jerseyans aren’t finished speaking up for what our communities deserve,” said Amy Torres, moderator of the virtual hearing and Executive Director of the New Jersey Alliance for Immigrant Justice.

The virtual hearing, organized by the For The Many NJ coalition, included testimony from essential workers, community leaders, advocates, and policy experts in support of using the federal funds to provide direct relief and support to families struggling to keep up with everyday costs.

“To advance racial equity and help the people still getting back on their feet from the pandemic, New Jersey should spend its flexible federal recovery funds on their intended purpose: direct relief,” said Peter Chen, Senior Policy Analyst at New Jersey Policy Perspective (NJPP). “Direct relief is itself a transformational investment. Helping people avoid poverty, homelessness, and deprivation reduces pain right now but also builds resiliency for the future.”

Signed into law in March 2021, the American Rescue Plan (ARP) provided billions of dollars in flexible funding for states and local governments to begin reversing the harms done by the pandemic and promote an equitable economic recovery. New Jersey state government received $6.2 billion in flexible aid, more than $3 billion of which is still available.

“New Jersey should not squander this opportunity. As state policymakers consider how to use more than $3 billion in remaining Fiscal Recovery Funds, they should work with communities to identify the best ways to use these funds,” said Ed Lazere, Senior Fellow in State Fiscal Policy, The Center on Budget and Policy Priorities. “The economic recovery remains uneven and incomplete, with many still struggling with incomes that are not enough to pay rent or afford food.”

Residents from across the state joined the hearing to share their stories and encourage lawmakers to provide more relief to families struggling to keep a roof over their heads and food on the table.

“The impact of the pandemic is not over for many who were already struggling in our state,” said Wandalynn Miftahi, a member of the Anti-Poverty Networks Garden State Leaders program who is unable to afford housing on her own. “Mature people who are viable parts of their communities and striving to assist future generations look forward to a more positive, supportive community to live in. With high and rising housing costs, New Jersey must devote more to help people of color access and maintain safe, affordable homes. We must remember everything starts at home.”

The hearing served as a reminder that the pandemic is not over, with many families still living in poverty: 1 in 10 families in New Jersey are currently having trouble finding enough to eat, a third of renters are worried they’ll be evicted in the next two months.

“Between COVID and the current economy, the low- and moderate-income families continue to struggle to pay for basic living expenses,” said Susan Biegen, another member of the Garden State Leaders program. “The Emergency Rental Assistance Program has not been able to keep up with the need with many families being told there is no funding left. American Rescue Plan funds would best be used by providing back rent, utilities, and food assistance so families won’t have to worry about eviction and hunger.”

Some lawmakers have suggested using federal assistance to provide tax cuts to profitable businesses despite a clear need to make the state more affordable for low- and moderate-income families.

“To make New Jersey more affordable for our low- and moderate-income families we must prioritize state revenues and American Rescue Plan funds to increase supports for families in deep poverty, allocate sufficient funds to keep people in their homes, expand health coverage to all kids and uninsured residents, and establish a state child and earned income tax credit,” said Maura Collinsgru, Director of Policy and Advocacy, New Jersey Citizen Action. “These programs will help ensure residents most impacted by the pandemic and rising inflation can not only survive, but thrive.”

Immigrant community members joined the virtual hearing to urge lawmakers to provide further relief to residents excluded from most forms of federal and state assistance — and for the state to invest in language access so all residents can apply for programs and services they already qualify for.

“Two years into the pandemic, there still are more than a half million people left behind from all forms of relief,” said Aida Mucha, Member Leader with Make the Road New Jersey. “It’s a disgrace that half of New Jersey’s federal ARP fiscal recovery funds are still sitting unused and unallocated when families like mine are struggling to pay bills. I worked throughout the pandemic to deliver food to families in quarantine, but I was excluded from aid like so many immigrant essential workers. I urge the state to take action now to provide direct relief to excluded workers.”

“Nearly one in two New Jerseyans is a person of color and almost a quarter of us are foreign born,” said Laura Bustamante, Policy & Campaign Manager, New Jersey Alliance for Immigrant Justice. “New Jerseyans speak over 155 languages, one in four households speaks a non-English language at home. With the recent increase in access to status neutral services and programs, newly eligible New Jerseyans are facing linguistic barriers, leaving these landmark initiatives inaccessible. Beyond that racial and ethnic categories currently used in agencies that capture demographic information are overly generalized, rendering distinct populations invisible. If the State is looking to make wise use of the dollars it invests in public programs, language access and data disaggregation will be necessary tools. ”

The pandemic and resulting economic fallout has disproportionately harmed Black and Latinx/Hispanic communities. Policy experts and advocates testified at the hearing in support of targeting aid to these communities to begin reversing racial inequities.

“Before New Jersey can become stronger, fairer and a more affordable state, there must be a commitment to equity and justice,” said Racquel Romans-Henry, Director of Policy at Salvation and Social Justice. “That commitment begins with but is not limited to significant investments in the development of violence interruption, harm reduction and restorative justice hubs; investments in neighborhood maternal health centers; community reinvestment of cannabis revenue; and funding the Office of Legislative Services so that they may prepare racial impact statements for policy changes that affect pretrial detention, sentencing and parole as required by S677 passed in 2018.”

“For the many students in our school who have seen pre-pandemic inequities impact their education at an even greater level, it is important that the state act now and accelerated addressing these challenges,” said Kaleena Berryman, convener of Our Children/Our Schools. “Funds should be allocated for student and educator mental health, building health and safety upgrades, and a concentrated approach to ensure students with disabilities and English language learners receive the extra support needed due to months of lost time. To make this happen, the state must also concentrate of fully staffing the Department of Education.”

“The impacts of the pandemic are still being felt by our schoolchildren and their teachers, especially in lower-income communities,” said Greg Stankiewicz, Statewide Coordinator, NJ Community Schools Coalition. “We urge the Governor and Legislature to allocate $10 million in American Rescue Plan funds to support expanding community school approaches to more low-income public schools, helping nonprofits and universities work together with school districts to provide additional needed services to students and families.”

“As Dickens wrote, we are living in the best of times and the worst of times for our state budget,” said Doug O’Malley, Director, Environment New Jersey. “We have a historically flush budget with an ample surplus as well as an additional $3 billion in reserve through the American Rescue Plan. Unfortunately, we still see ongoing raids to NJ Transit’s capital budget and the state Clean Energy Fund and flat funding to state agencies, as well as lead service lines and water infrastructure that need to be replaced. This is the moment to invest in our environment, clean energy and public health and make historic investments — and give the public a chance to weigh in on this opportunity.”

“New Jersey should not squander this opportunity. As state policymakers consider how to use more than $3 billion in remaining Fiscal Recovery Funds, they should work with communities to identify the best ways to use these funds,” added Ed Lazere of the Center on Budget and Policy Priorities. “The economic recovery remains uneven and incomplete, with many still struggling with incomes that are not enough to pay rent or afford food.”

Watch a recording of the virtual hearing here.

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ANCHORs Aweigh: Explaining Governor Murphy’s New Property Tax Relief Program

Posted on by Peter Chen

Everyone in New Jersey deserves a fair property tax system, where lower-income and lower-wealth families get money back for the high cost of housing, while wealthier families pay what they owe to support schools and high-quality public services that strengthen our communities. So when property tax relief proposals come along, we must ask: Who does this program make New Jersey affordable for, and by how much? Does it advance equity and close the gap between wealthy and the rest, or does it widen that gap?

As the centerpiece of his latest budget proposal, Governor Murphy announced a new property tax credit named “ANCHOR” (Affordable New Jersey Communities for Homeowners and Renters). This explainer outlines the size and scope of the proposal, how it stacks up against existing property tax relief benefits, and highlights who benefits most from it — and by how much.

What is ANCHOR?

Despite the new name, ANCHOR is really an expansion of the Homestead Benefit program, which provides property tax relief to homeowners who earn up to $75,000 per year, as well as seniors and those who meet the state’s definition of “disabled” earning up to $150,000 per year.

The proposed ANCHOR program would expand the Homestead Benefit in three main ways:

  • Increasing the credit amount for current recipients
  • Extending the benefit to homeowners with higher incomes ($75,000-$250,000 annual income)
  • Reopening the benefit to renters on a limited basis.

 

The credit would cost an additional $550 million in Fiscal Year 2023 — for a total of $893 million in property tax credits — and would increase in subsequent years.[i] The average yearly credit amount for homeowners would be $682 and the renter credit would be fixed at either $150 or $250, depending on other factors.

Who benefits from ANCHOR?

It’s important to contrast the proposed ANCHOR program with the Homestead Benefit that it would replace.

Homeowners: As noted above, the ANCHOR proposal would extend property tax relief to households earning between $75,000 and $250,000, well into the top 15 percent of earners in the state.[ii] For reference, the median household income in New Jersey was roughly $83,000 in 2019.[iii]

The following graphs show how much homeowners would receive in the new ANCHOR program, as a percentage of their total property tax bill, compared to the current Homestead Benefit program.[iv]

Although households in all eligible income ranges receive increases, the increases are largest for the higher-income homeowners not previously eligible for the credit. More than $150 million of the credit would go to households earning $150,000 annually or more, including households well within the top 20 percent of New Jersey earners.[v] Of the $550 million in additional funding for the program, more than a quarter would go to well-off households.

A property tax credit that advances equity should not include benefits to the wealthiest households simply because they happen to own their homes.

Renters: The ANCHOR proposal notably includes renters in property tax relief. Renters, on average, have lower incomes than homeowners in New Jersey – where median homeowner income ($112,000) is more than double median renter income ($52,000).[vi] Although renters do not pay property taxes directly, a substantial portion of their rent goes toward their landlords’ property tax payments.[vii]

The credit amounts proposed in ANCHOR are substantially smaller than for homeowners. Benefits are fixed at $150 for most renters earning under $100,000, and $250 for seniors or disabled renters who earn less than $70,000.[viii] In total, payments to renters make up only about $100 million of the nearly $900 million cost of the ANCHOR program in the coming fiscal year – less than the amount going to households earning $150,000 or more. To advance a more equitable tax code, the dollar amount going to renters should be increased to parity with homeowner benefits.

To better enable the program to alleviate wealth inequality and help those who need it most, the ANCHOR program should direct fewer dollars to high-income homeowners, and more to renters.

How does a property tax credit affect wealth inequality?

As lawmakers on both sides of the aisle talk about the need to make the state more affordable —  in this case, through property tax rebates  — they gloss over the fact that property ownership is heavily tied with wealth. The median homeowner nationally has $255,000 in net worth, compared with a mere $6,300 for the median renter.[ix] And this wealth includes non-home wealth as well, as homeowners possess on average more financial assets like bonds, stocks, and retirement accounts.[x]

Why does wealth matter? Wealth provides families and communities with greater economic security and opportunity, enabling them to sustain financial shocks, afford educational opportunities for their children, invest in business opportunities, and engage in greater political advocacy.

And because Black and Hispanic/Latinx New Jersey residents make up a much smaller proportion of homeowners than they do of the population as a whole, the gap between wealth in homeowners and renters also drives racial wealth inequality. As one recent report from the New Jersey Institute for Social Justice points out, the median white household in New Jersey has $132,000 in home equity, while the median Black and median Hispanic/Latinx household have $0.[xi]

White householders make up 74 percent of all owner-occupied units in the state, but only 39 percent of renter-occupied units. Benefits that go primarily to homeowners run the risk of disproportionately benefiting wealthier, white households.

Further, like the current Homestead credit, the ANCHOR credit is based on a percentage of a homeowner’s tax bill, which will likely benefit those with more expensive homes. For example, 10 percent of a $1 million home’s tax bill is much higher than 10 percent of a $300,000 home’s tax bill in the same town.[xii]

Any property tax benefit runs the risk of primarily benefiting homeowners who already have substantial wealth, rather than low- and moderate-income residents who need the most help with housing costs.

How will this work in practice?

These concepts can be difficult to convey, especially the interplay between higher incomes and higher property values and tax bills. Here are some hypothetical examples of the ANCHOR credit as proposed for FY 2023 to better illustrate who will benefit — and by how much. The dollar amounts are in the ballpark of the median property tax bills and household incomes for the towns indicated.

Although all income groups in the eligibility range benefit, the largest gains would go to those with high property tax bills earning between $75,000 and $250,000. But this range is quite wide, and individual results may vary on factors including a property’s assessed value, local property tax rates, and special levies, to name a few.

There’s also a large difference in financial footing between a household of four with an income of $200,000 and a household of one with an income of $100,000, including the home they might own or rent and the town where they live.

Even with the wide range of possible credit amounts, a credit that advances affordability and economic equity should not provide households with income above $150,000 with average benefit amounts three times greater than the maximum renter benefit amount.

So, as lawmakers propose ways to make New Jersey more affordable through new property tax relief, the question remains: Affordable for who?

End notes

[i] State of New Jersey, Budget in Brief FY 2023, pg. 11-12.  https://www.nj.gov/treasury/omb/publications/23bib/BIB.pdf

[ii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars). https://data.census.gov/cedsci/table?q=s1901&g=0400000US34&tid=ACSST5Y2019.S1901

[iii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars). https://data.census.gov/cedsci/table?q=s1901&g=0400000US34&tid=ACSST5Y2019.S1901

[iv] Derek Hall, Here’s how much you would get in N.J. property tax rebates under new Murphy plan, NJ.com (March 8, 2022). https://www.nj.com/politics/2022/03/heres-how-much-you-would-get-in-nj-property-tax-rebates-under-new-murphy-plan.html

[v] The top quintile in New Jersey income starts around $166,000. See U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table B19080: Household Income Quintile Upper Limits. https://data.census.gov/cedsci/table?q=income%20quintile&g=0400000US34&tid=ACSDT5Y2019.B19080

[vi] U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table S2503: Financial Characteristics. https://data.census.gov/cedsci/table?q=income%20tenure&g=0400000US34&tid=ACSST1Y2019.S2503

[vii] Under New Jersey’s current property tax deduction system, 18% of rent paid during the year is considered property taxes paid. https://www.state.nj.us/treasury/taxation/njit35.shtml

[viii] Budget in Brief FY2023 at pg. 12.

[ix] Federal Reserve, Survey of Consumer Finances, year 2019 data. https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median

[x] Federal Reserve, Survey of Consumer Finances, year 2019 data. https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median

[xi] New Jersey Institute for Social Justice, Making the Two New Jerseys One, February 15, 2022, https://assets.nationbuilder.com/njisj/pages/689/attachments/original/1645217098/Making_the_Two_New_Jerseys_One_2.15.22-compressed.pdf?1645217098

[xii] The Homestead Benefit does have a cap of $10,000 on claimable property taxes paid. N.J. Division of Taxation, How Homestead Benefits Are Calculated, last updated July 16, 2021, https://www.state.nj.us/treasury/taxation/homestead/hrhomeowneramounts.shtml.

[xiii] The Homestead Benefit currently caps eligible property tax bills at $10,000. This table assumes the cap will remain in the ANCHOR program.

https://www.state.nj.us/treasury/taxation/homestead/hrhomeowneramounts.shtml.

The State Budget Can Do More to Make New Jersey Affordable for All

Posted on by Peter Chen

Good morning, Chairwoman Pintor Marin and members of the committee. My name is Peter Chen and I am a senior policy analyst at New Jersey Policy Perspective (NJPP), a nonpartisan think tank focused on advancing economic, social, and racial justice. Our organization is also a member of the For The Many budget coalition.

Thank you for this opportunity to submit testimony on New Jersey’s Fiscal Year 2023 Budget.

Affordable for Who?

We have been hearing the drumbeat on making New Jersey “affordable” but as we have noted, the question we must ask is “affordable for who?” New Jersey’s economy works best when it works for all of us. An inclusive recovery is one where we prioritize making the state affordable for those hit hardest by the pandemic — Black and Hispanic/Latinx workers, students, families, and communities in particular. That’s why it’s so important that the FY 2023 budget advances changes which make the tax code more equitable and the state more affordable for low- and moderate-income households.

NJPP has proposed a package of programs to put money back in the pockets of these families and individuals, including:

  • A state-level Child Tax Credit;
  • Expansion of the Earned Income Tax Credit, both in amount and eligibility;
  • Replenishment of the Excluded New Jerseyans Fund;
  • Reforms to WorkFirst New Jersey that improve eligibility and benefits.

 

These proposals would directly support the families still fighting to make ends meet, as federal aid dries up.

And to help the middle-class and working-class New Jerseyans are struggling with skyrocketing housing costs and inflationary pressure, the state must spend the remaining $3.5 billion Fiscal Recovery Funds (FRF) in ways that reflect the principles President Biden set down: to directly address the public health crisis, help the people who need it most, and reduce racial and economic inequities exposed and worsened by the ongoing pandemic.

NJPP recommends direct relief payments and hazard pay for essential workers who put their lives at risk when COVID swept through the state, health care workers who now suffer from PTSD, and child care workers who are indispensable to the workforce yet remain severely underpaid. Those individuals held up as “heroes” during the pandemic deserve actual compensation for the risks they continue to face, not lip service.

Planning for the Future

With anticipation of funding cliffs in the future, New Jersey must begin planning for the future responsibly. As the pandemic demonstrated, a hollowed-out state government and lack of financial cushion cannot effectively meet crises when they emerge.

Lawmakers should take a multi-year approach to budget-making this year to ensure the $4.5 billion surplus puts the state on solid ground once the federal aid is gone and economic activity slows. Taking this more balanced approach to state finances ensures that the next crisis does not result in cuts that disproportionately harm Black, Hispanic/Latinx and lower-income communities.

We strongly recommend making a deposit into the now-empty rainy day fund of $1.5 billion to prepare for the future.

No Giveaways for the Wealthy

The pandemic has laid bare the deep economic chasm between the wealthy and the rest of the state. The wealthiest 1 percent of Americans have seen their wealth balloon by 50 percent since the pandemic began. Corporate profits are up, as are home valuations. When budget proposals include giveaways to households in the top-20 percent of income, or blanket tax cuts for businesses, those benefits are going straight to the wealthy and widening the wealth gap.

Meanwhile, for low-wage workers, even modest wage growth has been swallowed by higher costs for housing and food. One in 10 New Jersey residents lives in poverty, and 1 in 3 live in an “ALICE” (Asset-Limited Income-Constrained Employed) household. Will these budget proposals benefit these populations? Or will they be further giveaways to wealthy residents and corporate shareholders?

Despite this clear gap, this legislative session is teeming with proposals on “affordability” whose benefits go to the wealthy. Business owners, residential property owners, and corporate shareholders are disproportionately white and wealthy. Without careful tailoring, benefits that go to these groups will widen, rather than narrow, the gap between haves and have-nots.

State lawmakers should prioritize making New Jersey affordable for those who need the most help — not the wealthy and well-connected.

The taxes we pay are how we work together to all chip in for our shared goals and to make sure we have what we need. But the truth is some pay less than what they truly owe, putting the burden on the rest of us. Closing corporate tax loopholes and ensuring the ultra-wealthy pay their fair share can help New Jersey both fully recover and reach its full potential.

NJPP’s set of tax credit and direct-payment proposals would ensure that the hard-working New Jerseyans who kept residents safe, healthy and cared-for during the pandemic receive the help they deserve. This budget must help the grocery worker, the home health aide, the child care teacher, and the educational support aide to find the opportunity they deserve. As you evaluate this budget, NJPP asks that you keep these folks in the front of your mind, not the wealthy.

There’s no need to overthink this. We have plenty of evidence from the pandemic that direct payments and cash assistance work to reduce poverty and food insecurity, improve family finances, and stimulate the economy.

Making New Jersey affordable for low- and moderate-income households means giving them back the money they need to find economic security for themselves and their families.

Thank you for your time and attention.

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