TRENTON – Democrats’ legislation to restore a tax credit for working poor families that was slashed by Gov. Chris Christie was approved 47-24-5 Thursday by the Assembly, giving it final legislative approval.
The Earned Income Tax Credit is a credit for working poor residents who work and have earned income. Christie slashed the credit from 25 percent of the federal tax credit to 20 percent in 2010, effectively raising the income tax liability for New Jersey families by $45 million. The bill (A-3793) would reverse the cut and restore the program to its previous level of 25 percent beginning in tax year 2013.
Christie has vetoed previous bills to restore the EITC (A-3029 in 2012 and A-4204 in 2011), even while guarding tax breaks for millionaires and offering to restore the EITC in unrelated initiatives, such as his recent rejection of a Democratic bill to raise the minimum wage.
The New Jersey earned income tax credit is a refundable credit intended to “make work pay” by offsetting the burden of taxes for low and moderate income workers.
According to the federal and state data, about 528,000 taxpayers received an average state benefit amount of approximately $430 during tax year 2010, the most recent year for which data are available.
“The last thing working poor families needed was a tax increase, but that’s exactly what they got from Gov. Christie, even as he was protecting tax cuts for millionaires and playing callous politics,” said Assembly Speaker Sheila Oliver (D-Essex/Passaic). “Gov. Christie and Republicans can zealously justify tax cuts for millionaires while saddling poor working families with tax increases, but Democrats won’t give up this fight to do the right thing.”
Created in 1975 to ease the burden of payroll taxes for the working poor, the federal earned-income tax credit was expanded by President Reagan, and has substantially reduced child poverty and increased incentives to work. Twenty-four states created their own credits to extend tax relief for their residents, based on a percentage of the federal credit.
The bill now goes to the governor.