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NJ Earned Income Tax Credit Could Climb as Part of Deal to Hike Gas Tax

Friday, May 13, 2016   (0 Comments)
Share | 05/13/16

Senate President Stephen Sweeney (D-Gloucester) stated Tuesday that boosting a tax credit for the state’s lowest-wage workers needs to be at the foundation of any effort to make state tax policies more equitable. Sweeney’s statement comes as the Senate has been facing criticism from the left this year for publicly toying with the idea of making several tax-policy changes, including phasing out the estate tax, that many have viewed as being only beneficial to the wealthy. While the state Assembly has already approved a measure seeking to boost the credit, it remains to be seen whether the change will make it into what lawmakers hope will be a broad, bipartisan tax-policy deal that’s enacted by the end of June.

Christie has yet to say exactly how he plans to renew the fund, which is deep in debt and has already reached its statutory borrowing limit. While he hasn’t embraced the gas-tax hike sought by Democrats, he also hasn’t ruled out striking a broader deal with lawmakers that would involve trading the hike for other cuts sought by Republicans to provide overall tax fairness. That’s led Democrats -- with Sweeney and others in the Senate taking the lead -- to discuss a series of possible tax-policy changes that would come with an increase in the gas tax, which at 14.5 cents is the second-lowest in the country. The list of proposed tax breaks has included phasing out New Jersey’s estate tax and also increasing how much income from pensions, annuities, 401(k) plans, and other sources of retirement income can be exempted from the state income tax. Creating a New Jersey income-tax deduction for charitable contributions has also been floated in talks of a broad tradeoff.

If approved before the end of June, the increase in the tax credit would be the second in the past year. Christie -- on the eve of announcing a bid for U.S. president last year that he ultimately abandoned -- asked Democratic legislative leaders to support boosting the credit from 20 percent to 30 percent of the federal version. They quickly agreed, setting the credit at its current level. Bradley Schnure, acting director of communications for the Senate Republicans, issued a statement yesterday suggesting the GOP caucus would be willing to take a close look at Turner’s bill. “Senate Republicans are always willing to discuss opportunities to reduce the tax burden and provide tax relief for the people of New Jersey,” he said.

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