Last week – on Tax Day – Gov. Chris Christie took the opportunity to veto a bill that would have ended his 3-year-old tax increase on 500,000 of New Jersey’s working families – including 23,000 in Atlantic County. Instead, the governor has chosen to yet again hold their livelihoods hostage to secure a reckless tax cut for residents making as much as $400,000 a year.
Half a million hardworking New Jersey families rely on the Earned Income Tax Credit, or EITC. The refundable tax credit helps offset the high cost of living for low-income families and gives adults an incentive to work instead of relying on welfare or other public programs. And it’s been championed by conservatives – including Ronald Reagan, who called it “the best anti-poverty, best pro-family policy, best job-creating measure to come out of Congress.”
But in early 2010, Christie slashed the EITC, essentially raising taxes on 500,000. He cut the state credit by 20 percent, costing some families up to a week’s pay. And while he claimed raising taxes on the working poor was necessary, he allowed tax rates on the richest 1 percent to drop that same year.
Even as the governor has expressed public regret about his tax hike on the poor, he’s shamelessly dangled the possibility of restoring it above legislators to try and get what he wants. Last February, he conditioned restoring the credit on approval of his proposed income tax cut that would have given 40 percent of its benefit to the top 1 percent. The Legislature turned him down.
A year later he offered to restore the credit in return for the Legislature going along with his proposal to water down a minimum wage increase. That would have hurt many of the people the EITC is meant to help in the first place, so the Legislature turned him down yet again.
Instead, lawmakers asked him to put his money where his mouth was by putting a bill that would end his tax hike on the poor on his desk. But instead of doing the right thing, Christie continues to play politics with the livelihoods of families living on the edge. This time he wants a modified tax plan that would give people making $400,000 per year a tax cut and that could cost the state up to $1.6 billion per year. Even worse, Christie wants to give people making $400,000 a year a tax cut this year while waiting a full year before ending his tax hike on the poor.
Holding the livelihoods of hard-working families hostage isn’t just cruel, it’s fundamentally short-sighted. New Jersey’s economy is hurting, and a robust EITC program would be a huge benefit. New Jersey Policy Perspective has found that 35,000 families have fallen far enough into real poverty to qualify for EITC since the recession began in 2008.
And it isn’t just those families that would benefit. Studies show that tax credits for the working poor provide a benefit to the economy that Christie’s tax cuts for the rich have failed to yield. That’s because the rich tend to save their money while low-income families are often forced to spend it immediately, providing a much-needed stimulus and creating a demand for goods, services – and jobs.
Restoring the Earned Income Tax Credit is a smart and relatively inexpensive way to give our economy a boost and give working people some relief. If the governor is putting people making nearly a half-million dollars over low-income families, it’s up to legislators to fight back and hold him accountable. They should reject his bad deal and vote to override the governor’s veto immediately.