Wednesday, March 28, 2007

Too poor to pay income taxes? N.J. says 'No'

from North Jersey Com

By LAURA FASBACH
TRENTON BUREAU

Residents earning below the federal poverty level in New Jersey aren't necessarily exempt from paying state income taxes even though most states give a break to the working poor, a new study shows.

New Jersey is one of only 19 states in the country that require some low-income residents to pay state income tax, according to the Center on Budget and Policy Priorities in Washington, D.C., which released its study Tuesday.

Jon Shure, president of the New Jersey Policy Perspective, said the report is "embarrassing" to wealthy New Jersey.

"This report today shows how we're adding insult to injury in New Jersey," Shure said. "Not only are people below the federal poverty level, but you have to pay income tax, too."

Shure said there is a silver lining in the study, noting that it points out ways states like New Jersey can help the working poor.

One way New Jersey can eliminate the state income tax burden would be to raise the income eligibility for the state Earned Income Tax Credit Program, a plan that Governor Corzine proposed in his budget address last month.

The governor's spending plan has slated $64 million to raise the threshold to $40,000. The change would ensure that up to 300,000 additional families could receive both the state and federal credit.

Shure said if the Legislature supports the governor's plan, New Jersey can "remove itself form this tax hall of shame."

Sen. Loretta Weinberg, D-Teaneck, said supporting changes to the Earned Income Tax Credit is a relatively simple way to make a big difference in the lives of low-income families.

"We're giving property tax relief to people who earn up to $250,000, but at the other end of the spectrum we have to help more," Weinberg said. "In Bergen County, there are pockets of extremely wealthy people and pockets of working poor."

Last year, Corzine proposed a measure that would eliminate state income tax for married couples making less than $25,000 and individuals making less than $15,000. But the plan died in negotiations with the Legislature. So far, there hasn't been legislative opposition to raising the income eligibility of the Earned Income Tax Credit plan. Shure said he is optimistic that the recent plan will pass this year.

"In a high-cost state like New Jersey, even people making well above $20,000 still can't afford basic necessities," Shure said. "Taxing anyone who is below the poverty line is especially burdensome."

E-mail: fasbach@northjersey.com

No comments: