Restoring the NJ Earned Income Tax Credit
Monday, August 13, 2012 • 11:45am
Two years ago, the New Jersey Legislature reduced the state Earned Income Tax Credit (EITC), from 25% to 20% of the federal credit. That meant that for each dollar the federal government gave back to working families, NJ reduced their match by 5%. This may not sound like much but the EITC is one of the most powerful income stabilizing strategies available to working families in NJ. At the United Way of Passaic County’s Financial Empowerment Zone(FEZ), 26% of our families qualified for EITC this year - bringing over $106,000 in federal refunds back into our community. On average, each family that qualified for EITC at the FEZ, could have gotten more than $100 back in to their pockets had the NJ matching portion not been reduced.
Our families use their EITC money in many ways. They cover pressing, day-to-day bills and are spend their money at the local level, patronizing neighborhood stores and other businesses. Because their EITC-bolstered tax refund may be the largest single check they’ll receive all year, Passaic County households report that they try to set-aside some portion for savings toward specific, long-term goals or to brace for unforeseen needs emergencies.
The NJ Assembly Republicans introduced a bill this week that restores the earned income credit. Bill A-3235, will restore the NJ Earned Income Tax Credit from 20 percent to 25 percent of the federal tax credit. The bill goes further and creates a property tax credit of up to $1,000 for the first $10,000 of property taxes paid by homeowners making less than $400,000 annually and increases the income tax credit for renters from $50 to $250.
We are pleased to see that the NJ Legislature also believes that this is an important issue that impacts working families in our community. We believe that A-3235 incorporates ideology from both sides of the aisle. We urge our elected officials to vote to pass tax relief for the benefit of our neighbors and co-workers.
President and CEO United Way of Passaic County