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Tax-Credit Hike Helps NJ’s Working Poor – and May Also Help Candidate Christie

Wednesday, July 1, 2015   (0 Comments)
Share | 06/29/15

Gov. Chris Christie caught Democrats who control the state Legislature off guard last week when he proposed increasing a tax credit for the state’s lowest-paid workers. It’s the Democrats who have been trying unsuccessfully for the past several years to get Christie to reverse a cut to the same tax-credit program that he enacted in 2010. And while the Democrats embraced the governor’s proposal last week -- which came in the form of a conditional veto of a bill they sent him that also sought to increase the top-end income tax rate on earnings over $1 million -- it’s likely Christie will have the most to gain as he now begins to focus even more on running for president in 2016. Under the conditional veto he sent back to lawmakers on Friday at the same time that he line-item vetoed their budget bill for the next fiscal year, the tax credit would go up to 30 percent of the federal credit, meaning roughly 500,000 of the state’s lowest-wage earners will keep a combined $120 million instead of seeing it go into the state budget.

“We’re now going to cut taxes for the working poor in this state,” Christie said while making the announcement in the State House. He also said the increase of the credit would bring New Jersey in line with New York, which also offers low-wage workers a credit that equals 30 percent of the federal credit. Lawmakers in both the state Assembly and Senate are expected to approve Christie’s proposal in votes scheduled to be held today in the State House. New Jersey is one of 26 states that offers its own version of the Earned Income Tax Credit. Income eligibility here ranges from $14,590 for workers without children to $52,247 for those with three children or more, according to New Jersey Policy Perspective, a liberal think tank based in Trenton. The change will give back up to $600 annually to the lowest earners. "The tax code shouldn't push people who are working hard but not making enough to get by further into poverty -- yet it does,” said Jon Whiten, the organization’s deputy director.

By increasing the Earned Income Tax Credit, Christie gets another tax cut to promote on the stump as a presidential candidate, said Matthew Hale, a Seton Hall University political science professor. And it also gives him some cover on the tax-fairness issue. “He could be using this as a way to say he cut taxes for the working people of New Jersey,” Hale said. “He can say that with a straight face.” Senate President Stephen Sweeney (D-Gloucester) said Christie’s earlier cut over the past five years has cost the same workers $250 million. But that point is likely to be missed by national reporters covering Christie as a presidential candidate. Also likely to be overlooked is that, using the same logic as Christie when he portrays the increase of the credit as a tax cut, many of the same working poor have seen their net property-tax bills increase thanks to Christie, after he reduced funding for Homestead property tax relief.

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