Category Archives: Earned Income Tax Credit

Rush Holt: Libraries Offer 21st Century Skills

The following is from Congressman Rush Holt’s Newsletter

Yesterday, I joined the nation’s top library official, Susan Hildreth of the Institute for Museum and Library Services (IMLS), to visit public and school libraries in Monroe, East Brunswick, and Princeton.

America’s libraries are more widely used today than at any other point in history, with more than three quarters of Americans having visited a library in the last year. Yet these are trying times for libraries.

Even as libraries have lost funding from towns, counties, and states, they have experienced a surge in demand due to the millions of Americans looking for jobs and finding them using library services. In fact, an IMLS survey found that 30 million Americans used a library to address career and employment needs in 2009. The demand is not just for computers, but also for qualified librarians who can offer guidance on how to set-up an e-mail account, use resume formats, and file an online job application or unemployment claim.

As Director Hildreth and I saw in our visits, New Jersey libraries are working hard. In Congress I have introduced the Workforce Investments through Local Libraries (WILL) Act to integrate libraries into our job training efforts. My bill has been endorsed by the American Library Association, and I am very hopeful that it will be passed into law as Congress works to reauthorize the Workforce Investment Act later this year.

Remembering Martin Luther King, Jr.

At a time when inequality runs rampant and when so many across America are seeking work, Dr. Martin Luther King, Jr.’s message of equality, social justice, and economic opportunity resonates still after half a century. As Dr. King said in 1961:

“I look forward confidently to the day when all who work for a living will be one with no thought to their separateness as Negroes, Jews, Italians or any other distinctions. This will be the day when we bring into full realization the American dream—a dream yet unfulfilled. A dream of equality of opportunity, of privilege and property widely distributed; a dream of a land where men will not take necessities from the many to give luxuries to the few; a dream of a land where men will not argue that the color of a man’s skin determines the content of his character; a dream of a nation where all our gifts and resources are held not for ourselves alone, but as instruments of service for the rest of humanity; the dream of a country where every man will respect the dignity and worth of the human personality. That is the dream.”

Earned Income Tax Credit Offers Support to Working Families

One of America’s most important anti-poverty programs is also among the least recognized: the Earned Income Tax Credit, or EITC. In 2010 alone, the EITC lifted 5.4 million people, including 3 million children, above the poverty line.

The EITC is a refundable tax credit – that is, when the size of the credit exceeds the amount of taxes owed, a taxpayer receives the excess as a refund. It originated in the 1970s as a compromise between Democrats and Republicans who had differing views about the best way to fight poverty. Democrats had long supported lifting families out of poverty through the enactment of a strong minimum wage; Republicans had long argued that a high minimum wage would lead employers to hire fewer people.

The EITC provided financial support to working families, as Democrats desired, while avoiding any wage distortions in the labor market that Republicans feared. Presidents from both political parties have embraced and expanded the EITC for more than three decades.

Yet this tradition of bipartisan support has fractured in recent years. Republicans have increasingly attacked as “lucky duckies” the low-income families whose tax burdens are greatly reduced or eliminated by the EITC. Meanwhile, as the minimum wage has stagnated and our economy has faltered, the EITC has been forced to bear more and more of the burden of combating poverty – yet its increased importance has not been matched by increases in the tax credit’s size. Congress and the states should do more to support working families.

The IRS offers further details about the EITC, and a tool to help determine whether you are eligible, on its website.

Sincerely,

Rush Holt
Member of Congress

Leave a comment

Filed under Congressman Rush Holt, Earned Income Tax Credit, Institute for Museum and Library Services (IMLS), Martin Luther King Jr., Newsletter, Workforce Investments through Local Libraries (WILL) Act

N.J. Gov. Chris Christie must put politics aside, help needy

If you didn’t catch it this morning former NJ Senate Majority Leader Barbara Buono (D-Middlesex) had an excellent Op-ed piece published over at NJ.Com that emplores Governor Christie to put politics aside and help those that are the most needy by putting the needs of other before personal ambitions by creating a more progressive tax system that will help families that are currently living paycheck to paycheck:

When leaders of political parties in New York state recently agreed to raise the tax rate on the wealthiest to help the middle class, a truly revolutionary concept was born — politicians putting the needs of the people ahead of their own personal ambitions.

In New Jersey, unfortunately, Gov. Chris Christie has set his sights on the national stage and repeatedly refused to consider the democratically led effort to create a more progressive tax rate because it would defy the rules of the conservative playbook.

This same steely denial of the realities of the working class is evident on the conservative side of every major debate taking place in Washington — whether it’s on debt reduction, extending the Social Security payroll tax or the merits of the Occupy movement.

Overlooked is the growing number of Americans now living in, or just above, poverty. In New Jersey, the number of residents receiving food stamps has doubled in the past four years. Recently released Census figures based on a new poverty formula show that nearly 50 million Americans are poor and the number of those living just above the poverty line is far greater than once believed.

What makes this new formula unique is that it takes into account government assistance such as food stamps, housing aid, subsidized lunches and the Earned Income Tax Credit. Once these factors are considered, roughly 3 million people rise above the poverty line, proving government assistance can and does make a difference in the lives of working families.

Sadly, those on the right have no qualms about slashing these assistance programs, proving their empathy extends only to the super rich while the plight of poor and middle-class families is viewed with rote disregard….

Finish reading Senator Buono Op-ed that was posted online at NJ.Com …. Here

Leave a comment

Filed under Earned Income Tax Credit, food stamps, Gov. Chris Christie, NJ.com, occupy wall st., Op-Ed, progressive tax rate, Senate Majority Leader, Senator Barbara Buono

As A Matter Of Fact…1 in 6 New Jerseyans hit By Governor’s vetoes


From July 11th, 2011 | Published in NJPP Blog: As a Matter of Fact …

By Raymond J. Castro, Senior Policy Analyst

One in six New Jerseyans will be adversely affected by line-item vetoes of two critical programs in the budget Governor Christie signed last week.

Today, the state Senate is expected to vote on restoring funding for those programs – the state Earned Income Tax Credit and NJ Family Care. Doing so, however, will require bipartisan support in order to achieve two-thirds majority.

The governor’s vetoes represented unprecedented cutbacks in state services and will affect more than 1.5 million residents, mostly low-income working families with children. Without these supports many parents will be unable to continue to work in low and moderate wage jobs that support their children in a state with one of the highest costs of living in the nation.

Last week the Legislature passed a state budget that fully funded these program. However the governor in New Jersey has considerably more power than governors in many states and has the discretion to delete any funds proposed for specific programs – or any “line item” in the budget. The only way that those funds can be restored is for the Legislature to vote to overturn each veto with a two-thirds vote.

When voting on each line-item, it will be important that legislators know what the impact is on people in their districts. New Jersey Policy Perspective has created an analysis to show the number of people, county by county, who will be affected by these two line item vetos, which were among dozens of vetoes by the governor.

Budgets reflect a state’s priorities. The public does not always know where individual legislators stand on those priorities because the budget is usually voted on in its entirety. That will all change today, and we hope that each lawmaker, regardless of party, recognizes just how devastating these cuts can be to wide numbers of New Jerseyans.

Leave a comment

Filed under As a Matter of Fact, budget cuts, children, Earned Income Tax Credit, Gov. Chris Christie, line item veto, low income families, New Jersey Policy Perspective, NJ FamilyCare, working poor

>As A Matter Of Fact…State pleads poverty to reduce tax credits for working families, but has enough to provide tax credits for corporations

>April 18th, 2011

For working families struggling to make ends meet, the state Earned Income Tax Credit is a necessity, and the Christie Administration’s 25 percent reduction in the credit this year for about a half million New Jersey families is a devastating increase in the taxes they owe.

Today, on tax day, it’s important to note that a parent with two children working full time at the minimum wage of $7.25 an hour (about $15,000 a year) will owe $300 more in taxes – or more than a week’s wages.

These are the same families who are also being targeted for other cuts in services that are essential to their independence. Last year about 48,000 uninsured parents who received the state EITC were denied health coverage through NJFamilyCare. That number is expected to rise to 92,000 parents this year.

It is getting to the point in New Jersey where, for many marginal families, it simply doesn’t pay to work. Aside from stripping those working families of their independence, it creates an even greater cost to the state.

The governor’s favorite rock star, Bruce Springsteen, recently cited a Legal Services of New Jersey report in a letter to the Asbury Park Press, writing, “the cuts are eating away at the lower edges of the middle class, not just those already classified as in poverty, and are likely to continue to get worse over the next few years.” The census data backs up his assertion. From 2005 to 2009 lower income groups increased, the middle class shrank and the number of wealthier people increased in New Jersey. Economics plays a role in this, but so does state policy.

This cutback in tax credits for working families comes even as the Christie administration and the Legislature are expanding tax credits for corporations in New Jersey.

For example, last month the state awarded Campbell Soup a $41 million tax credit to renovate its corporate headquarters, move 49 jobs from Cherry Hill to Camden and hire 50 new employees at the Camden site over the next 10 years. The credit includes $6.3 million for new furniture. Campbell qualifies for the subsidy, officially called the Urban Transit Hub Tax Credit, which is aimed at redeveloping urban centers, because its offices are within a mile of the Walter Rand Transportation Center.

The total cost to the state to fund that tax credit to Campbell Soup is nearly as much as the $45 million in savings gained by reducing the state EITC.

So who needs this help the most, one of the largest corporation in America or working New Jerseyans who can barely make ends meet to support their children? It’s unfortunate example of why the state needs a more balanced approach — one that doesn’t focus only on cuts in services, but also balances the demand for shared sacrifice fairly between working families and giant corporations.

Interested in learning more about the Earned Income Tax Credit? Check out this piece by the Center on Budget and Policy Priorities:

A Hand Up: How State Earned Income Tax Credits Help Working Families Escape Poverty in 2011

Leave a comment

Filed under As a Matter of Fact, blog, Bruce Springsteen, corporate tax breaks, Earned Income Tax Credit, Gov. Chris Christie, New Jersey Policy Perspective, NJFamilyCare, poverty

>NJPP Monday Minute 1/10/11: NJ EITC: Governor’s No Tax Pledge Ignores Poor Working Families

>
Amid the celebrating about extending federal income tax cuts to everyone in the year ahead, New Jersey is ringing in the new year with a substantial tax increase. Not to worry, though, the only ones who will be paying more in taxes are those who can least afford to pay more.

The state saved $45 million in the current year budget when it slashed a tax break given to families scratching out a living just above the poverty line. This tax break called the Earned Income Tax Credit (EITC) provides a credit to working poor families against the tax they might pay on the income they earn. The New Jersey EITC is calculated as a percentage of the federal EITC. The state reduced that percentage last year to 20 percent from 25 percent of the federal credit (a 20 percent cut), starting January 1, 2011.

This change will result in a $300 loss to a single parent raising two children with a minimum wage job that pays $15,000 a year. That amounts to more than one week’s pay. Even with the extension of federal tax cuts in Washington, working poor families in New Jersey will be less well off in 2011 than they were in 2010.

While the Christie Administration said the state could not afford to sustain the 25 percent credit to the poorest families in the coming year, the Governor and the Legislature have been willing to increase tax credits to major corporations by hundreds of millions of dollars.

Here’s just one example of many. Through the Urban Transit Hub Tax Credit program, the state approved three 10-year tax breaks that will benefit Wakefern Corporation, which operates the Shop-Rite chain of grocery stores. Wakefern itself received a $29.2 million grant in August and will benefit from another $15.7 million grant to its landlord. In December, it received a third grant for $58 million. Wakefern certainly must have been pleased to get these tax breaks. Especially since all it had to do was locate three warehouses in Newark and Elizabeth, which it might have done anyway. The state, on the other hand, will lose up to $103 million in corporate tax revenues over ten years if Wakefern fulfills the grant requirements.

Tax credits are set up to encourage certain behavior. The governor and legislators choose to believe that offering tax credits to corporations will encourage them to do what they otherwise might not do. They are even willing to give away billions of dollars with little proof that these incentives cost more than they benefit the state.

Evidence does exist that the EITC encourages people to work rather than accept welfare. By leveling the playing field for families at or below 200 percent of the federal poverty level (that’s $36,620 for a family of three in 2011), it encourages them to work. The credit is designed to help offset the high cost of living in New Jersey (which ranks fifth among all states) and compensates them for paying a disproportionate share of their income in regressive taxes, like sales and property taxes.

Gov. Christie pushed for and the Legislature approved a cutback in the EITC despite the opposition of working parents who depend on these funds to support their children and in the face of objections from advocacy organizations representing these families. It was the wrong thing to do at a time when so many poor families are struggling.

New Jersey has become a state that cuts taxes on millionaires and corporations but raises them on the state’s poorest working families. The EITC is a good investment for New Jersey’s workers. In the coming fiscal year, the governor and the legislature should find the $45 million necessary to help people help themselves.

Leave a comment

Filed under Earned Income Tax Credit, Gov. Chris Christie, Monday Minute, New Jersey Policy Perspective, Taxes, working poor

NJPP Monday Minute 6/7/10: EITC Helps the State and Working Families

Budgets are about priorities so it is surprising that a Republican governor like Chris Christie would propose cutting a benefit that rewards work, avoids welfare and cuts taxes. Yet that is the impact of his recommendation to reduce the state Earned Income Tax Credit (EITC) by 20 percent.

The EITC is a federal and state program that helps low wage working families make ends meet. State EITCs are calculated as a percent of the federal credit. Nearly half a million struggling working families with children receive this credit. For a parent raising two children working in a full time minimum wage job ($15,000 a year), Gov. Christie’s budget proposal would reduce the family’s state EITC credit by about $300. The total loss to these struggling households from this policy recommendation is a staggering $45 million.

The driving force behind the governor’s proposal to cut the state EITC is budget savings-but those may be questionable because of the impact of those cuts on the amount of federal funds New Jersey receives to support low wage workers. The US House of Representatives has passed legislation that includes the extension of TANF Emergency Contingency funds. If this legislation becomes law, New Jersey would receive up to $120 million in new federal funds in FY 2011. With Senators Menendez’s and Lautenberg’s help, the Senate could approve these funds soon. But if the state EITC appropriation is cut in this year’s budget, the state could lose money because the amount the federal government gives the state is based on how much the state has increased funding for benefits to low-income families since 2007.

Beyond budget savings, the administration is supporting its decision to cut benefits by saying, “New Jersey’s benefit is one of the most generous in the country. At the reduced rate, New Jersey will be more in line with the average benefit in the 22 other states that offer the credit.” Unfortunately this statement misses the point of the state EITC.

New Jersey’s EITC is currently set at 25 percent of the federal EITC, making it sixth highest among the 23 states with their own EITCs. States calculate their credits as a percent of the federal EITC which is available to families and individuals with incomes up to $48,000 to reduce the taxes they owe. For most of these households the federal credit is also “refundable”-meaning that even if they do not owe taxes, they still receive a refund. The purpose of this policy is to compensate low-income families for the federal payroll taxes (social security etc) they pay.

States have enacted their own EITCs for a variety of reasons, including the impact of state and local taxes on low income families. More important than taxes, however, is how much it costs to live in different states. New Jersey’s cost of living is fifth highest in the nation, exceeding Minnesota, Vermont, Maryland and New York even though all of these states have higher state EITCs than New Jersey. Parents in low wage jobs who have children cannot make ends meet with New Jersey’s high child care, housing, health insurance, and transportation costs now-and most of these will become even less affordable when the effects of the cuts and program cost increases in Gov. Christie’s budget take place.

The impact of EITCs is to encourage people to work. Without the subsidies provided by the EITC, it makes more economic sense for low-income families not to work and instead go on welfare. Welfare subsidizes many of the costs to raise children but it doesn’t lead to a strong work ethic.

A recession–when people are struggling to make ends meet and are worried about losing their jobs–is the wrong time to cut supports to working families. Many families who were living a middle class life style have fallen on hard times been forced to take lower wage or part time jobs, and that’s if they have been lucky enough to find them. But basic expenses, like housing, do not go away. These folks need public support from the state to maintain their independence until the economy improves and they can regain their standard of living.

It is the wrong time to cut the state EITC for yet another reason. Increases in the federal EITC that took effect last year in the American Recovery and Reinvestment Act will end this year unless Congress extends them. The expansion of the Child Tax Credit to the poorest working families is also scheduled to terminate. A parent working full time for the minimum wage and raising two kids, would have their child tax credit reduced from $1,725 to $250, causing increased hardship to that family.

The disparity between the wealthiest and the poorest in New Jersey has been growing at an alarming rate. The state EITC helps address New Jersey’s rising income inequity which has been growing at the ninth highest rate in the nation for the last two decades. During this time, the wealthiest five percent of New Jersey households have seen their incomes grow by 91 percent while those in the bottom 20 percent have seen only a 10 percent increase. In 2008, households in the top five percent (who earned an average of $412,476), earned 26 times the average amount earned ($15,705) by the lowest 20 percent.

Despite this, the governor refuses to reinstate the 2009 tax rates on those earning over $400,000 at the same time as he is essentially proposing a tax hike for lower income working families by cutting the state EITC. If the legislature is unable to override the governor on this issue, the economic divide between the “haves and have nots” will only further increase in our state.

Leave a comment

Filed under Child Tax Credit, Earned Income Tax Credit, Gov. Chris Christie, Monday Minute, New Jersey, New Jersey Policy Perspective