An increase in the earned income tax credit must be a part of any plan for tax fairness in New Jersey, according to Senate President Steve Sweeney.
Previous proposals focused on phasing out the estate tax and allowing a tax deduction for charitable contributions. But Sweeney says a higher tax credit for the working poor has been overlooked.
“If we’re going to do anything, you have to start there because these are people that bear the greatest brunt or the higher percentage of paying taxes,” Sweeney said Tuesday. “And these are the people that every dollar they get back goes right back into the economy.”
Democrats want the state income credit to be 40 percent of the federal level.
Boosting it from the current 30 percent would cost about $120 million.
Sen. Shirley Turner suggests reducing tax subsidies to businesses to pay for it.
“We’ve spent already over $6 billion in tax subsidies for businesses. Now how effective has that been?” said Turner, D-Mercer. “Instead of using the trickle down, let’s try trickle up. Put the money into the pockets of the people who need it most, who will spend it, and the rest of the economy will benefit.”
Jim Jacob with the Anti-Poverty Network of New Jersey said the additional $225 annually that a 10 percent increase represents would help half a million New Jersey residents struggling to make ends meet.
“They are families for whom an unexpected car repair can mean they can’t pay their electric bill and for whom a child’s growth spurt can mean a budget crisis,” Jacob said. “In short, they’re families for whom a few hundred dollars a year can make the difference between making it and falling through the cracks.”