New Jersey should join a number of states that offer low-income parents special tax breaks to offset the costs of raising children, the advocacy group said.
The New Jersey Policy Perspective, a think tank from Trenton, argues in a new report that such a tax policy would be an effective way to combat persistently high poverty and income inequality in an expensive state like New Jersey.
“New Jersey will become a stronger state with greater opportunities if every family can provide a safe and healthy life for their children,” the report said.
Liberation of report Tuesday fell to the point that in Washington, D.C., remains in the air the fate of heightened federal tax breaks that helped many families make ends meet during the coronavirus pandemic due to ongoing political differences.
The state-level proposal also came weeks before Gov. Phil Murphy is due to release New Jersey’s budget plan for next fiscal year, and as so-called accessibility issues have come to the forefront of Trenton’s majority Democrats following the November election. Republicans took seats in both houses of the Legislative Council.
“We hear a lot from New Jersey politicians about accessibility, and New Jersey needs to be an accessible place to raise children,” said Peter Chen, senior analyst at New Jersey Policy Perspective, who authored the report.
“But affordability is virtually impossible if you live in one in 10 families (in New Jersey) who earn below the poverty line, or in one in three low-income families,” Chen said.
New Jersey is already offering families a tax credit to help them reimburse qualified childcare costs. That credit was increased by Murphy and lawmakers last year during a pandemic.
New Jersey for years has also offered a state version of the federal income tax credit, or EITC, tax breaks aimed at low-paid workers and families. The state version of the EITC has also recently been expanded by Murphy and lawmakers.
And last year, in the run-up to the 2021 gubernatorial and legislative elections, Murphy and lawmakers used the state budget to fund income tax rebates of up to $ 500 which were sent to thousands of families.
Two ways to give tax breaks
But a report released Tuesday called for the introduction of brand-new state-level tax breaks that would boost federal tax breaks on children that were granted to millions of families nationwide last year under the U.S. Rescue Plan Act by $ 1.9 trillion. .
Although research has shown that improved federal loans – which provided greater tax breaks for those with young children – have been a successful tool in tackling child poverty, it remains to be seen whether extended loans will be provided by Congress.
In New Jersey, the report suggests two ways one could establish a similar government tax credit policy to address the goal of tackling poverty and income inequality.
Under one scenario, child tax breaks could be provided to any family in New Jersey earning up to 250% of the federal poverty line, which is nearly $ 70,000 for a family of four in New Jersey and $ 58,000 for a family of three. to a political perspective. An estimated 424,000 New Jersey families meet this proposal, with the average eligible family receiving $ 246 in loans.
The second option, proposed by the group, provides for tax benefits for children aimed at families with children under 5 years of age and meeting the same income standards. According to the report, this will achieve an average household loan of up to $ 550 for approximately 186,000 families.
In both cases, the proposed tax breaks will be provided as a “repayable” loan, which means that taxpayers can get all the amount they are entitled to, even if it exceeds their gross income tax liability.
Target low-income families
Both scenarios will also send 100% tax breaks to low-income families, which would help the state eliminate long-standing racial disparities in wealth, say advocates who discussed the proposals during a news conference.
“Working for the poor is two words that should never be heard together in the richest country in the world or in one of the richest states in the country,” said Rene Kubiadis, director of anti-poverty program at New Jersey Citizen Action. which works closely with the lowest-income state residents.
“Young black and Latin American children are three to four times more likely to be in poverty than white children,” Kubiadis said. “Tax breaks are a very effective way to reduce racial inequality and poverty.”
Both options, discussed in Tuesday’s report, will cost about $ 100 million to manage, which advocates say is a relatively small amount for a state that spends more than $ 45 billion annually.
Meanwhile, the propaganda group’s proposals also call for going beyond the current rules of the right to receive a federal tax credit for children. Instead of requiring a federal Social Security number, the state may use individual taxpayer identification numbers to cover more eligible families, the report said. (According to the U.S. Immigration Council in Washington, D.C., individual taxpayer ID numbers are issued by the Internal Revenue Service and ensure that residents who are not eligible for a Social Security number, including undocumented immigrants, pay taxes). tax credit for children, the state can provide tax benefits to families with adult dependents under 24 years. Such a policy would recognize that “children’s expenses do not disappear completely when they enter school before 12,” the report said. .