Topic Category: Tax and Budget

Fairly and Adequately Taxing Inherited Wealth Will Fight Inequality & Provide Essential Resources for All New Jerseyans

Posted on by Sheila Reynertson

To read this report as a PDF, click here.

As wealth and income gaps between average New Jerseyans and the state’s wealthiest households continue to grow, policymakers must take steps to address this extreme inequality. One of the most effective ways to do so is to restore fair and adequate taxation of inherited wealth. This targeted tax policy can help close the wealth gap in the long run by facilitating crucial investments that can boost all New Jersey families – not just those that pass millions of dollars down from one generation to the next.

Decades of uneven income and wealth growth have put the wealthiest residents miles ahead of everyone else. This has made it harder for most families striving to get ahead and put a strain on future economic growth. In fact, these widening disparities have been responsible for having depressed U.S. economic growth by more than 20 percentage points from 1990 to 2010.[1]

And New Jersey is among the states where this trend is most pronounced.

New Jersey has the seventh widest income gap in the country, with the wealthiest 5 percent of households earning an average of 16 times more than the poorest 20 percent, and an average of five times more than the middle 20 percent.[2] And these figures significantly understate the disparity, because they don’t include income from capital gains – which go disproportionately to the richest households.

The income of the richest 1 percent of households in the Garden State grew 190 percent between 1979 and 2013, while everybody else’s income grew just 20 percent. A lopsided gain on that scale hasn’t been seen in New Jersey since the Gilded Age in the 1920s.

One of the most effective ways to promote widespread prosperity is to tax inherited wealth. For decades New Jersey has done just that by levying both an estate tax and an inheritance tax and using the revenue for assets like public colleges, safe communities and health care that benefit everyone.

Currently, 18 states plus D.C. levy either an estate tax, an inheritance tax or both. States that tax inherited wealth include – not surprisingly – most of the country’s wealthiest states. In fact, 4 of the 5 states with the highest median household income, and 4 of the 5 with the highest share of millionaire households, tax inherited wealth.[3] And 15 of the 18 states have a higher median household income than the country as a whole.

In New Jersey, very few heirs pay these taxes on inherited wealth: about 5 percent of heirs pay the estate tax, and about 5 percent pay the inheritance tax – and many pay both, so overall fewer than 10 percent of heirs pay these taxes.

The estate tax is paid by estates based on the net value of its assets on the day of the death; the inheritance tax is paid by individuals who receive gifts from estates. Together, these taxes bring in more than half-billion dollars in annual revenue and have been a reliable, even growing, source of funding for New Jersey. Last year they brought in nearly $770 million – a 51 percent increase since 2002.[4]

Some 300 estates – the very largest, with taxable assets over $3 million – pay 39 percent of estate and inheritance taxes in a given year.

However, New Jersey’s estate tax is on course to be fully repealed on January 1, 2018, giving a spectacular tax break to a few thousand of New Jersey’s wealthiest families and significantly reducing the state’s capacity to make investments benefitting all New Jerseyans. Policymakers should reverse course by restoring fair and adequate taxation of inherited wealth by either bringing back the estate tax, reforming the inheritance tax or some combination of both. 

Restoring New Jersey’s Estate Tax

For decades, New Jersey’s estate tax has been paid by heirs of estates worth over $675,000, with tiered tax rates topping out at 16 percent. Just 4 to 5 percent of estates – those of New Jersey’s wealthiest households – are large enough to owe any estate tax. Nothing passed on to a surviving spouse, civil union partner or domestic partner is subject to the estate tax. And the amount of estate tax owed is reduced by any New Jersey inheritance tax paid, ensuring that inherited wealth is not taxed twice.

Once the estate tax is fully repealed, the state will lose about $500 million a year, greatly reducing the state’s ability to make crucial investments while further enriching the heirs of New Jersey’s wealthiest families.[5]

It’s from those inheriting extreme amounts of wealth that the estate tax collects the bulk of its dollars. In fact, the largest 4 percent of estates make up 43 percent of the tax paid, while the smallest 37 percent of estates make up just 7 percent. Eliminating this tax gives those inheriting estates worth more than $5 million a tax break averaging a whopping $1.1 million – a reduction 51 times larger than the break for those inheriting estates with taxable assets between $675,000 and $1 million.

By restoring the estate tax with a higher threshold, New Jersey could regain the lion’s share of estate tax revenue it has collected while ensuring that the wealthiest heirs pay their fair share. For example, reinstating the tax on estates worth more than $1 million would recoup 93 percent of the tax revenue, preserving an estimated $5.6 billion over the next decade – dollars that are sorely needed to meet the needs of all New Jersey families and invest in the building blocks of a strong economy.

That would put New Jersey back on the map with other wealthy states and neighboring states that tax inherited wealth.

Strengthening New Jersey’s Inheritance Tax

New Jersey is one of six states that collect an inheritance tax. Established in 1892, this tax is levied on inheritances over $25,000 for some relatives and on inheritances worth over $500 for estates inherited by non-relatives. The tax rate now ranges between 11 and 16 percent depending on the relation to the decedent and size of the estate. Most close relatives are exempt, as are charitable donations. Over 5,000 estates are subject to the tax per year bringing in between $300 million and $400 million per year.

While lawmakers eliminated the estate tax last year, they left the inheritance tax in place. If New Jersey is to depend on the inheritance tax as its only source of taxation of inherited wealth, then policymakers must reform it to make it fairer and more adequate.

Currently, bequests exceeding $25,000 are taxed at 11 to 16 percent, depending on the gift’s value. This applies to siblings (including half brothers and sisters), the spouse, widow or widower of the decedent’s child, and the surviving civil union partner of the decedent’s child. These beneficiaries make up 30 percent of inheritance tax filers and bring in 20 percent of the revenue.

The bulk of the inheritance tax is paid by a class of non-exempt beneficiaries that includes aunts and uncles, nieces and nephews, cousins and other heirs. These include out-of-state beneficiaries as the tax is applied to the deceased person who lived in, or had property in, New Jersey. They pay 15 percent on the first $500 to $700,000 they receive and 16 percent on anything above that amount. These filers pay about 80 percent of all the inheritance tax revenue.[6]

The most effective way to reform the inheritance tax would be to expand the types of heirs required to pay the tax. Bringing the exemptions to the inheritance tax in line with those who are exempt from the estate tax – namely ensuring that a spouse or domestic partner of the deceased remains exempt – would increase the amount of revenue collected by this tax. This means family members like descendants, parents and grandparents would be required to pay inheritance tax.

In addition to expanding the universe of those who are subject to the tax, lawmakers ought to reform the inheritance tax to ensure that only New Jersey’s wealthiest heirs pay the tax. Creating a exemption up to $1 million would keep this tax fair and help guard against concentrated wealth.

Lawmakers should also explore tweaking – and simplifying – the inheritance tax rates. Currently the top rate of 16 percent kicks in at $1.7 million for some heirs, and $700,000 for others. If no tax was levied on estates under $1 million, adopting a simplified bracket system with progressively higher rates at each million-dollar mark and ranging from 11 to 20 percent would be sensible.

Taxing Inherited Wealth Has Little Impact on Retiree Interstate Moves

Despite stories to the contrary, there is no credible evidence to support the claim that New Jersey’s elderly residents are fleeing taxes on inherited wealth by moving to lower-tax or no-tax states. In fact, the annual revenue collected from the estate and inheritance taxes has been consistently reliable – and growing. Any revenue loss from wealthy retirees choosing to leave the state to avoid these taxes hardly compares to the significant revenue raised by them.

In the most rigorous study on the effect of estate taxes on interstate moves to date, the patterns of state-to-state movement among American elderly have remained relatively consistent over time, even as state tax policies toward the elderly changed significantly across states.[7] In other words, if older people who leave New Jersey are heading to popular retiree destinations regardless of tax policy, there is no reason to offer them tax breaks in the hopes that they will stay.

Endnotes

[1] The Organisation for Economic Co-operation and Development, Trends in Income Inequality and its Impact on Economic Growth, December 2014.

[2] Center on Budget and Policy Priorities and Economic Policy Institute, How State Tax Policies Can Stop Increasing Inequality and Start Reducing It, December 2016.

[3] Five highest median household income states taken from U.S. Census American Community Survey, 2015. Five highest shares of millionaire households taken from Phoenix Marketing International, Millionaires By State Ranking, 2010-2016.

[4] New Jersey Department of the Treasury, Comprehensive Annual Financial Reports, FY 2001 – FY 2015.

[5] New Jersey Office of Legislative Services, Legislative Fiscal Estimate of A-12, October 2016.

[6] For more details on who is exempt from the inheritance tax, visit www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/transferinheritanceclasses.pdf. For more details on the tax rates, visit http://www.state.nj.us/treasury/taxation/inheritance-estate/tax-rates.shtml

[7] National Tax Journal, No Country for Old Men (Or Women): Do State Tax Policies Drive Away the Elderly?, June 2012.

Trump Budget Would Shift Food Assistance Costs to New Jersey

Posted on by NJPP Staff

New Jersey would have to come up with about $300 million a year to cover the lost federal funding for food stamps, costing the Garden State an estimated $2.1 billion over 10 years, under President Trump’s budget proposal, according to a report released today.

The budget proposal would shift a significant share of the cost of paying for food assistance to states and allow states to – for the first time ­– cut benefits, according to the report from the Washington, D.C.-based Center on Budget and Policy Priorities (CBPP). The proposal seriously threatens the success the Supplemental Nutrition and Assistance Program’s (SNAP, previously known as Food Stamps) has had in reducing severe hunger and malnutrition.

“This proposal threatens to dramatically increase the number of New Jerseyans at risk of going hungry,” said Adele LaTourette, director of the New Jersey Anti-Hunger Coalition. “In a nation of this much wealth, that would be unconscionable. New Jersey’s Congressional delegation must reject any proposal that puts New Jersey families, kids, seniors, and people with disabilities at risk of not getting enough to eat.”

Historically, SNAP benefits have been financed exclusively with federal funds to ensure that regional disparities in hunger, poverty and resources are properly addressed. This has helped ensure that low-income households have access to adequate food no matter where they might live.

The President’s budget would end this longstanding and successful approach by forcing states to cover 10 percent of SNAP benefit costs beginning in 2020, and increasing that share to 25 percent by 2023. The proposal would cut federal SNAP funding by $116 billion over a decade.

“New Jersey is in dire fiscal condition, and its safety net is already in tatters. It’d be unable to absorb such significant cost shifts without cutting SNAP benefits and taking other steps that could increase hunger and hardship,” said Jon Whiten, Vice President of New Jersey Policy Perspective. “Budgets are moral documents that reflect our priorities as a society. We need our members of Congress to stand up and say: Increased hunger and poverty go against my values, and I won’t support a federal spending plan that guts food assistance.”

And, these added costs would come on top hundreds of billions of dollars in additional costs shifts to states both in the President’s budget. In total, the President’s budget would shift about $453 billion annually to states and localities once the cuts were fully implemented in 2027.

At the same time, the President is proposing massive tax cuts largely for the wealthy and corporations that would likely cost several trillion dollars over the coming decade.

Under the proposal, an estimated 51,000 New Jersey residents would lose even the most meager food stamp benefit, according to CBPP statistics.

In New Jersey alone, more than 800,000 people rely on this critical nutrition assistance. Most work – often juggling multiple jobs – and still can’t make ends meet because of low-wage jobs that offer few, if any, benefits.

The average SNAP benefit in New Jersey is a meager $142 per household. Research shows that every SNAP dollar is spent quickly and directly impacts the local economy by a multiplier of almost 2 to 1.

The New Jersey Anti-Hunger Coalition is traveling to Washington, D.C., this week to meet with the state’s Congressional delegation and educate them on how harmful this proposed cut would be.

“We are hopeful that our representatives will protect New Jersey’s most vulnerable residents and take steps to protect this vital piece of our safety net,” LaTourette said.

Don’t Dismiss Trump’s Budget as ‘Dead on Arrival’

Posted on by Jon Whiten

This op-ed appeared in the June 4, 2017 edition of the Sunday Star-Ledger.

When Congress returns to D.C. this week, they’ll begin working on President Trump’s budget proposal. Many of New Jersey’s Republican Congressional representatives – as well as a variety of other experts – have hinted that we need not worry about the president’s plan, because it is merely a suggestion and not really what Congress will end up approving and appropriating.

“The President proposes, and Congress disposes,” Congressman Leonard Lance has said several times. His colleague, the powerful House Appropriations Chair Rodney Frelinghuysen, has reiterated that “Congress has the power of the purse.”

And Gov. Christie’s spokesman, explaining why the governor wouldn’t weigh in on Trump’s plan, said “the federal spending proposal is not a final budget.”

These statements are all technically true. And I surely hope that Congress – and New Jersey’s House Republicans in particular – take that “power of the purse” seriously, weigh the severity of the pain that Trump’s proposal would bring to the Garden State, and move in a decidedly different direction.

However, it’s worth noting that Trump’s spending proposal is really quite similar to the budgets House Speaker Paul Ryan has put forward in recent years – budgets that many in the New Jersey Congressional delegation have supported.

What do the Trump and Ryan budget proposals have in common?

  • They slash food assistance and other help for struggling and low-income families.
  • They repeal the Affordable Care Act and target Medicaid for additional, severe cuts, putting health care in jeopardy for tens of millions of Americans.
  • They slash so-called “non-discretionary defense” spending, including higher education support for colleges and students, research and development, and critical environmental programs.
  • They shift a huge chunk of federal spending to states, forcing states like New Jersey – which cannot meet its past, current or future obligations – to either make up for the lost federal dollars (a task that’s clearly impossible) or make draconian cuts that will harm many New Jerseyans.
  • They use the money saved by these deep cuts to provide huge tax cuts for the most well-off Americans.
  • And they mask the true costs of those tax cuts by using budgetary gimmicks.

The human suffering from these spending plans would be real, and felt more in New Jersey than in most other states. That’s because we have a lagging economic recovery that has left too many families still struggling to make ends meet, barely holding onto the social safety net to get by in this high-cost state.

About 1.8 million New Jerseyans – including 852,000 kids – currently receive health coverage through Medicaid. Trump’s spending plan – when combined with the repeal of the Affordable Care Act passed by the House – cuts federal Medicaid spending by trillions of dollars over a decade. The most recent House budget did the same.

Meanwhile, nearly 900,000 New Jerseyans receive food assistance – and an overwhelming majority of them are in working families who just aren’t being paid enough to regularly put enough food on the table. Trump’s spending plan cuts the program that provides this assistance – the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) – by nearly $200 billion over a decade. The most recent House budget did the same.

And in terms of budget pressures on state lawmakers, the Trump plan and the Ryan proposals again lack significant differences. Two basic facts remain unchanged: Federal funding makes up 29 percent of New Jersey’s total spending, and the state already faces a budget crisis that has led to a record-setting 11 credit downgrades under Gov. Christie, chronic revenue shortfalls, and a long and growing list of unmet needs, obligations and investments.

The loss of any federal funding – particularly on the scale as proposed by President Trump and Speaker Ryan – would put New Jersey even deeper in the hole, and the state has no capacity to make up the difference on its own. (After all, unlike the federal government, states can’t print money or run deficits – which is why the feds have traditionally led the charge on safety net spending.)

The bottom line is that Trump’s budget, and the House budgets proposed by Speaker Ryan in recent years, would lead to dramatic increases in hardship and poverty, an enormous strain on New Jersey’s already-dire fiscal situation, a widening of the already-yawning gap between the wealthiest and the rest of us, and a weakening of key investments that are necessary to grow the economy and create a strong workforce for the state’s future.

Don’t Dismiss Trump’s Budget as ‘Dead on Arrival’

Posted on by Jon Whiten

This op-ed appeared in the June 4, 2017 edition of the Sunday Star-Ledger.

When Congress returns to D.C. this week, they’ll begin working on President Trump’s budget proposal. Many of New Jersey’s Republican Congressional representatives – as well as a variety of other experts – have hinted that we need not worry about the president’s plan, because it is merely a suggestion and not really what Congress will end up approving and appropriating.

“The President proposes, and Congress disposes,” Congressman Leonard Lance has said several times. His colleague, the powerful House Appropriations Chair Rodney Frelinghuysen, has reiterated that “Congress has the power of the purse.”

And Gov. Christie’s spokesman, explaining why the governor wouldn’t weigh in on Trump’s plan, said “the federal spending proposal is not a final budget.”

These statements are all technically true. And I surely hope that Congress – and New Jersey’s House Republicans in particular – take that “power of the purse” seriously, weigh the severity of the pain that Trump’s proposal would bring to the Garden State, and move in a decidedly different direction.

However, it’s worth noting that Trump’s spending proposal is really quite similar to the budgets House Speaker Paul Ryan has put forward in recent years – budgets that many in the New Jersey Congressional delegation have supported.

What do the Trump and Ryan budget proposals have in common?

  • They slash food assistance and other help for struggling and low-income families.
  • They repeal the Affordable Care Act and target Medicaid for additional, severe cuts, putting health care in jeopardy for tens of millions of Americans.
  • They slash so-called “non-discretionary defense” spending, including higher education support for colleges and students, research and development, and critical environmental programs.
  • They shift a huge chunk of federal spending to states, forcing states like New Jersey – which cannot meet its past, current or future obligations – to either make up for the lost federal dollars (a task that’s clearly impossible) or make draconian cuts that will harm many New Jerseyans.
  • They use the money saved by these deep cuts to provide huge tax cuts for the most well-off Americans.
  • And they mask the true costs of those tax cuts by using budgetary gimmicks.

The human suffering from these spending plans would be real, and felt more in New Jersey than in most other states. That’s because we have a lagging economic recovery that has left too many families still struggling to make ends meet, barely holding onto the social safety net to get by in this high-cost state.

About 1.8 million New Jerseyans – including 852,000 kids – currently receive health coverage through Medicaid. Trump’s spending plan – when combined with the repeal of the Affordable Care Act passed by the House – cuts federal Medicaid spending by trillions of dollars over a decade. The most recent House budget did the same.

Meanwhile, nearly 900,000 New Jerseyans receive food assistance – and an overwhelming majority of them are in working families who just aren’t being paid enough to regularly put enough food on the table. Trump’s spending plan cuts the program that provides this assistance – the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) – by nearly $200 billion over a decade. The most recent House budget did the same.

And in terms of budget pressures on state lawmakers, the Trump plan and the Ryan proposals again lack significant differences. Two basic facts remain unchanged: Federal funding makes up 29 percent of New Jersey’s total spending, and the state already faces a budget crisis that has led to a record-setting 11 credit downgrades under Gov. Christie, chronic revenue shortfalls, and a long and growing list of unmet needs, obligations and investments.

The loss of any federal funding – particularly on the scale as proposed by President Trump and Speaker Ryan – would put New Jersey even deeper in the hole, and the state has no capacity to make up the difference on its own. (After all, unlike the federal government, states can’t print money or run deficits – which is why the feds have traditionally led the charge on safety net spending.)

The bottom line is that Trump’s budget, and the House budgets proposed by Speaker Ryan in recent years, would lead to dramatic increases in hardship and poverty, an enormous strain on New Jersey’s already-dire fiscal situation, a widening of the already-yawning gap between the wealthiest and the rest of us, and a weakening of key investments that are necessary to grow the economy and create a strong workforce for the state’s future.

‘Fortune 500’: High-Tax States Are Great Places to Do Business

Posted on by Jon Whiten

The latest update to the annual Fortune 500 list of the largest American companies was released this week, and 21 Garden State businesses made the list. It’s an impressive showing for a state that usually falls to the bottom of misleading national rankings that claim to measure how attractive different states are to business investment. In fact, most of these so-called “studies” are promoted by organizations that are not advocating for a truly stronger business climate but only for lower corporate taxes.

Perhaps the most popular of these rankings is the Tax Foundation’s annual “Business Tax Climate” index. Business lobbying groups in New Jersey and anti-tax lawmakers frequently cite New Jersey’s perennial dismal ranking on this survey as proof that the Garden State’s taxes are stifling business investment and creating a drag on economic growth.

But an interesting trend emerges when one cross-references the Fortune 500 with the “Business Tax Climate” index: The “worst” states in the Tax Foundation’s index have a disproportionate share of America’s largest corporations, while the “best” states hardly have any.

In fact, not a single state that ranks in the top 10 of the Tax Foundation’s index has more Fortune 500 companies than New Jersey, which ranks dead last in the index. And the entire top 10 states, with just 28 Fortune 500 companies, barely have more of these big businesses than the Garden State alone.

The 10 “worst” Tax Foundation states – New Jersey, New York, California, Vermont, Minnesota, Ohio, Rhode Island, Connecticut, Maryland and Louisiana – have a total of 199 Fortune 500 companies. In other words, these represent 20 percent of all states but 40 percent of the Fortune 500.

Meanwhile, the Tax Foundation’s 10 “best” states – Wyoming, South Dakota, Alaska, Florida, Nevada, Montana, New Hampshire, Indiana, Utah and Oregon – have just 28 Fortune 500 companies, or 6 percent.

The bottom line: Despite the drumbeat of anti-tax groups and politicians, there is a long list of factors – like location, workforce, quality of life and more – that are far more important to most businesses than low taxes. And in a cruel and ironic twist, the more our elected leaders travel down the tax-cutting path, the less money there is to ensure the state is nurturing these far more important assets.

Support for State’s Poorest Kids Continues to Dwindle

Posted on by Raymond Castro

Last year, NJPP released a groundbreaking report that pinpointed the state’s stagnant cash assistance levels as a major cause of child poverty in New Jersey.

The report, and vigorous advocacy spearheaded by NJPP and key partners, led to swift legislative action: The legislature passed the first increase in TANF assistance since the late 1980s and – following the lead of many other states – repealed the punitive “family cap” policy. But the path to progress was blocked by Gov. Christie, who vetoed the modest boost in help for the state’s poorest families and children.

Fast forward to today: While it may be hard to believe, the situation has gotten even worse for New Jersey’s kids in just one year. Last year New Jersey had the 10th lowest TANF assistance level compared to other states – and this year it dropped to 7th lowest, falling behind states like Texas and Oklahoma, as we note in a new Fast Facts update.

New Jersey needs to invest in children like other states are doing – not ignore them like it has for the last 30 years.

Trump’s Budget Puts New Jerseyans of Color at Great Risk

Posted on by Jon Whiten

To read a PDF version of this report, click here.

The spending plan unveiled last week by President Trump would cause great harm to New Jersey, damaging the state’s low-income and working-class families the most. Deep cuts to health care, food assistance, aid for the disabled and more are paired with massive tax cuts for the wealthiest Americans, which will cause the widening gap between those doing very well and the rest of us to grow.

The proposal, which is also built on highly unrealistic growth projections, is an enormous cost shift from the federal government to states. As a result, the human cost will be most severe in states like New Jersey, where we already face chronic budget shortfalls and don’t have adequate resources to meet the needs of our residents.

And while all New Jerseyans are at risk under the President’s proposal, New Jerseyans of color stand to lose the most. Any cuts to programs that prevent, reduce or mitigate poverty are bound to disproportionately harm groups that experience higher rates of poverty.

In New Jersey as in other places, black and Hispanic residents face structural barriers to economic advancement – and are more than twice as likely as whites to live in poverty.

Cuts to Health Care

Medicaid – targeted for $600 billion in cuts over 10 years in the budget proposal, on top of the over $800 billion in cuts included in the version of the American Health Care Act passed by the House – currently provides health coverage to 1.8 million New Jerseyans.[1]

Of all current Medicaid recipients, nearly half (47 percent, or 852,000 people) are 18 years old or younger. And a majority of those who benefit from Medicaid (65 percent) are people of color.[2]

Cuts to Food Assistance

The Supplemental Nutrition Assistance Program (SNAP) – targeted for nearly $200 billion in cuts over 10 years – helped about 880,000 New Jerseyans in 441,000 households last year. Nearly three in four of those households included a child or an elderly or disabled family member.[3] And a majority of SNAP households (70 percent) are headed by a person of color.[4]

SNAP kept 155,000 people out of poverty in New Jersey, including 77,000 children, per year between 2009 and 2012, on average.[5] Trump’s budget would cut funding for SNAP in New Jersey by an estimated $2.1 billion over 10 years.[6]

Cuts to Cash Assistance

Temporary Assistance for Needy Families (TANF), which provides cash assistance and other supports to the poorest New Jersey families and children, is targeted for $22 billion in federal cuts over 10 years in the President’s budget.[7] About 46,000 New Jerseyans currently receive crucial assistance through TANF[8]; the number has shrunk dramatically since the late 1990s due to stagnant federal funding – the result of the program being changed from an entitlement to a block grant.

Since then, due to inflation, the value of the funding in New Jersey has been cut in half. And since eligibility is based on the benefit level, as the real value of the benefit has shrunk so has the number of eligible New Jerseyans.

This has made it extremely difficult for the safety net to reach families in need and is one of the reasons why about 90 percent of all children living in poverty in New Jersey receive no assistance from TANF. Only about 32,000 kids receive cash assistance today, compared to 316,000 in 1995.[9] Of the New Jersey kids receiving assistance, an overwhelming majority (85 percent) are children of color.

Any further federal funding decrease would decimate this program – particularly in states like New Jersey, which hasn’t put up any state money to increase benefit levels for 30 years. Trump’s budget would cut New Jersey funding for TANF by an estimated 10 percent, or $39 million a year.

Cuts to Heating Assistance

About 275,000 New Jersey households – of which seven in ten have either a young child, elderly person or an individual with a disability – get help paying heating bills each year from the Low Income Home Energy Assistance Program (LIHEAP).[10] This program – which brought about $127 million in federal funds to New Jersey in 2016[11] – is completely eliminated in President Trump’s proposed budget.

Of all the individuals that benefit from LIHEAP, a majority (an estimated 69 percent) are people of color.[12]

Cuts to Rental Assistance

A total of 304,000 New Jerseyans in 154,000 households rely on rental assistance from a slew of programs administered by the federal Department of Housing and Urban Development (HUD).[13] Overall, HUD programs are subject to an immediate 15 percent cut in President Trump’s budget proposal, including a 29 percent cut to public housing funding and a complete elimination of the HOME, Community Development Block Grant and Choice Neighborhoods programs that provide aid to poor communities.[14]

About one in three of these households includes a child under 18, and 61 percent include either a head of household or spouse who is elderly or disabled. Of the remaining 39 percent of households, most (64 percent) include at least one member who is working. And of all households receiving rental assistance, nearly three in four are headed by people of color.[15]

Trump’s budget would cut federal funds that come to New Jersey for public housing, the HOME program and the Community Development Block Grant program by $171 million in the first year alone.[16]

Endnotes

[1] According to administrative data from U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, February 2017.

[2] U.S. Census Bureau American Community Survey data, 2015 1-Year Estimates.

[3] U.S. Department of Agriculture 2015 SNAP household characteristics data

[4] Ibid 2

[5] Center on Budget and Policy Priorities, A Closer Look at Who Benefits from SNAP: State-by-State Fact Sheets, January 2017.

[6] Center on Budget and Policy Priorities, President’s Budget Would Shift Substantial Costs to States and Cut Food Assistance for Millions, May 2017.

[7] Center on Budget and Policy Priorities, Trump Budget Gets Three-Fifths of Its Cuts From Programs for Low- and Moderate-Income People, May 2017.

[8] New Jersey Department of Human Services, Division of Family Development Current Program Statistics, March 2017.

[9] New Jersey Policy Perspective, Fast Facts: Poorest New Jersey Children Continue to Suffer from Inadequate Assistance, May 2017.

[10] NJ Shares, May 2017 Newsletter.

[11] U.S. Department of Health and Human Services, 2016 Third Release of LIHEAP Block Grant Funds to States and Territories, Consolidated Appropriations Act, 2016.

[12] Center on Budget and Policy Priorities analysis of U.S. Census Bureau data from the Current Population Survey, March 2014-March 2016.

[13] Programs and funding streams covered in this calculation: public housing, Section 8 Housing Choice Vouchers, Section 8 Project-Based Rental Assistance, Supportive Housing for the Elderly and People with Disabilities, Rental Supplement, and Rental Assistance Program

[14] Center on Budget and Policy Priorities, Trump Budget Would Increase Homelessness and Hardship in Every State, End Federal Role in Community Development, May 2017.

[15] Center on Budget and Policy Priorities tabulation of Department of Housing and Urban Development (HUD) 2016 administrative data.

[16] Ibid 14

Trump Budget Targets Mixed-Status Immigrant Families

Posted on by Erika J Nava

Among the many vulnerable communities targeted by President Trump’s budget proposal are U.S. citizen children living with at least one undocumented parent. There are 128,000 New Jersey kids (and about 4 million nationwide) who would be punished for their parents’ immigration status under Trump’s plan – this is 6.5 percent of all kids in the state.

These children – and their parents – would be barred from accessing two vital working-family tax credits: the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) unless everyone in their family has a Social Security number. Most undocumented immigrants who pay taxes – to the tune of $587 million a year in state and local taxes here in New Jersey – use Individual Taxpayer Identification Numbers (ITIN).

Very few undocumented families receive the EITC, because it already requires that all family members have Social Security numbers. So the biggest pinch here will be on the CTC, which is currently open to parents with ITINs whose children have Social Security numbers.

This cruel action would ensure that these children miss out on the long-term benefits of these tax credits, just because somehow the administration sees them differently than other U.S. citizen children.

Most of these parents have been in the U.S. for years paying taxes and contributing to the economy, but are stuck in an outdated immigration system that prevents them from seeking legal status until their U.S. citizen child turns 21 and that child  sponsors them for legal status – which is not itself a guaranteed deal.

New Jersey’s members of Congress must put the future of the state’s children first. New Jersey has the 8th largest number of U.S.-citizen children of undocumented immigrants in the nation, and we cannot imperil our future because of discriminatory practices. Immigrants – both documented and undocumented – are an asset to our state and nation, and they should be treated with dignity and respect.

NJPP on How Trump Budget Would Hurt New Jersey

Posted on by NJPP Staff

NJTV News last night focused on the impact that President Trump’s proposed budget would have on New Jersey, and turned to New Jersey Policy Perspective Vice President Jon Whiten to help explain some of the human impact.

“The Trump budget is really a disaster for New Jersey and for residents across the state,” Whiten told Michael Aron. “It slashes assistance for health care 1.6 million New Jerseyans rely on. It slashes assistance for food and nutrition 900,000 New Jerseyans rely on. It completely eliminates assistance for home heating 800,000 New Jerseyans rely on, and really the list goes on, and on, and on and on.”

Trump Budget Would Cause Great Harm to New Jersey

Posted on by Jon Whiten

Updated May 24, 2017 with additional information on the size of the TANF cut to New Jersey, SNAP cuts’ impact on the New Jersey budget, and on how cuts to CHIP would harm the state.

The spending plan unveiled today by President Trump would cause great harm to New Jersey, damaging the state’s low-income and working-class families the most. Deep cuts to health care, food assistance, aid for the disabled and much much more are paired with massive tax cuts for the wealthiest Americans, which will cause the yawning gap between those doing very well and the rest of us to grow.

The proposal, which is also built on highly unrealistic growth projections, is an enormous cost shift from the federal government to states. As a result, the human cost will be most severe in states like New Jersey, where we already face chronic budget shortfalls and don’t have adequate resources to meet the needs of our residents.

Among the most damaging of the Trump cuts:

More than $600 billion in cuts to federal Medicaid funding over 10 years: These deep cuts to Medicaid come on top of the over $800 billion in Medicaid cuts included in the version of the American Health Care Act passed by the House. 1.6 million New Jerseyans rely on Medicaid for health coverage; federal funding for Medicaid in New Jersey stands at about $10 billion a year. Trump’s proposal fundamentally changes the entitlement structure of Medicaid by turning it into either a block grant or per-capita cap for states.

Nearly $200 billion in cuts to federal food assistance funding over 10 years: This equals an estimated $2.1 billion cut to the Supplemental Nutrition Assistance Program (SNAP) in New Jersey. In 2016, more than $1 billion in federal SNAP dollars kept around 800,000 struggling New Jersey individuals from going hungry. SNAP kept 155,000 people out of poverty in New Jersey, including 77,000 children, per year between 2009 and 2012, on average. Trump’s proposal dramatically shifts costs for SNAP to states by changing it from a program fully funded by the federal government to one where states must pony up an average of 25% of the costs. If that change were immediate, the cost to New Jersey’s state budget would be about $306 million a year.

$40 billion in purported savings that will be achieved by barring undocumented residents from receiving child care tax credits and the Earned Income Tax Credit: The IRS already requires a Social Security Number – not an Individual Taxpayer Identification Number (ITIN) – to receive the EITC, so what this change will be remains unclear. On the child care tax credit side, citizen children of undocumented parents with ITINs are eligible – and these are the families that would likely be hit the hardest. There are 128,000 such children in New Jersey.

$22 billion cut to TANF, which provides cash assistance for the poorest Americans: Federal funding for the program has not changed since the late 1990s, when cash assistance was turned into a block grant. Since then, due to inflation, the value of the funding has been cut in half. This is one of the reasons why about 90% of all children living in poverty in New Jersey receive no assistance from TANF. A further federal funding decrease would decimate this program – particularly in states like New Jersey, which hasn’t put up any state money to increase benefit levels for 30 years. NJPP estimates that Trump’s budget would cut New Jersey funding for TANF by 10 percent, or $39 million a year.

Changes to the Children’s Health Insurance Program (CHIP), which covers about 8 million Americans: NJPP estimates that 35,000 New Jersey children would be affected by the cut in the federal matching rate to 50 percent for kids above 250 percent of the federal poverty level. The state would have to replace those lost federal dollars or cut eligibility.

A complete elimination of the Low Income Home Energy Assistance Program (LIHEAP) program: LIHEAP helps approximately 800,000 low-income New Jerseyans — including many poor seniors — pay heating bills. Under the program, New Jersey received $116.3 million in the 2016 federal budget to help these families pay their bills.

A complete elimination of the Community Development Block Grant: This which supports housing, economic development and social service projects, mainly for low- and moderate-income New Jerseyans. In the 2016 federal budget, New Jersey received $81.3 million from the federal government under this grant.

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