The Star-Ledger

Gov. Chris Christie's Budget: Working Poor Are Stiffed With Reduced Earned Income Tax Credit

The Star-Ledger — Tuesday, March 23, 2010

By Star-Ledger Editorial Board

"We jump off the cliff together," Gov. Chris Christie said Tuesday in his death-defying budget speech.

But the truth is, some are being pushed off the cliff without a parachute, while others remain safely on the ground.

The governor wants to reduce the state earned income tax credit — which boosts the small paychecks of people working low-wage jobs — to save a paltry $45 million. Yet he vigorously defends a $900 million tax cut for the top tier of New Jersey's wealthiest families, those earning more than $400,000. It's cruel and nonsensical.

The state tax credit is based on the federal credit, considered the nation's largest and most successful anti-poverty program. 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. New Jersey is the first to propose cutting that percentage, from 25 percent to 20 percent.

"For a lot of people that's winter coats for the kids and food," said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action. "It's a major amount of money, and this is not the only way they're going to be affected." Under Christie's proposed plan, bottom-rung families also will get hit with higher bus fares and cuts in FamilyCare, the low-cost health insurance program.

Rakelmis Montas of Orange already filed her income tax returns with the help of Citizen Action and said she can't express how much the extra money helps, "not only for me, but for so many of my clients who are low-income." Montas is raising two children on her income of $24,456 as a program coordinator for a private, nonprofit organization. She'll receive $886 under the state tax credit program; if Christie's cut was in effect that woulde be reduced to $708. Her monthly expenses haven't changed. She'll still have to come up with $825 in rent and more than $100 in utility bills, and $540 for her daughter's day care. That doesn't include food and clothing, of course.

"He's raising taxes on the poorest people, the people making the minimum," said Jon Shure, state fiscal policy expert at the Center on Budget and Policy Priorities. "Now he's saying you have to sacrifice, and the wealthiest don't have to. They're getting a break."

Working families struggling in good faith to make ends meet, just like Rakelmis Montas, deserve better than that.

Top Top | NJCA in the News | NJCA Homepage