Report: N.J. taxes those in poverty

from The Cherry Hill Courier Post

By TOM HESTER Jr.

Nineteen states, including New Jersey, tax families living in poverty, according to a new report released Tuesday.

The Center on Budget and Policy Priorities found two-parent families of four who earn less than the federal poverty line -- $20,615 per year -- must pay income taxes in 19 of the 42 states that levy that tax.

"Families with very limited means are still taxed too much by states," said Jason Levitis, the report's author.

New Jersey doesn't require residents who earn less than $20,000 per year to pay income taxes, but the center found poor families in New Jersey who make between $20,000 and $20,615 owed $219.

"In a high-cost state like New Jersey, even people making well above $20,000 still can't afford basic necessities," said Jon Shure, president of New Jersey Policy Perspective, which has advocated for tax reforms to help poor families. "So taxing anyone who is below the poverty line is especially burdensome. It blocks their climb up the economic ladder."

Gov. Jon S. Corzine last year proposed increasing New Jersey's income tax threshold to $25,000, but withdrew the plan amid state budget woes. This year he has proposed extending the state's Earned Income Tax Credit to apply to families who earn up to $38,000, but the Legislature must approve the proposal.

The center found families with below-poverty-level incomes face more than $200 in state income taxes in Alabama, Arkansas, Hawaii, Indiana, Iowa, Michigan, Montana, New Jersey, Oregon, and West Virginia. In four -- Alabama, Arkansas, Hawaii and West Virginia -- they owe more than $400.

The nonprofit, nonpartisan research organization based in Washington, D.C. also noted states like Delaware, Oregon and Virginia last year either improved or implemented tax credits to help poorer families.

"By eliminating state income taxes on working families with incomes at or below the poverty line, states can offset some of the child care and transportation costs that families incur as they strive to become economically self-sufficient," Levitis said. "In other words, by eliminating income taxes on poor working families, states can help make work pay."