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For Richer or for Poorer?

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When New Jersey Governor Chris Christie claimed that his proposed budget would “protect and care for the most vulnerable among us,” he apparently was referring to the state’s millionaires rather than its low-wage workers.

Despite the governor’s stated aversion to tax increases to help fill the state’s gaping shortfall, the budget plan he negotiated with leading lawmakers — which the full legislature will vote on next Monday — raises taxes on families with children earning under $48,000.  The increase comes in the form of a reduction in the state’s Earned Income Tax Credit (EITC), which will take $45 million from 485,000 families.  (The budget also eliminates a property tax rebate for seniors, renters, and homeowners with incomes below $75,000, among other cuts.)

At the same time the governor called upon residents to “share the pain” of balancing the budget, he vetoed a temporary income tax increase on households making over $1 million, sacrificing $600 million in revenue that would have spared programs that help low-wage working families.

Scaling back EITCs — which encourage work, help families make ends meet, and spur consumption — isn’t a good option for raising state revenue.  That’s particularly true when we don’t ask wealthy individuals, who’ve enjoyed rapidly rising incomes and falling tax rates in recent decades, to pay more.

New Jersey’s budget problems are real, but so are the challenges that working families face — especially given the recession.  Other states have addressed serious budget problems through a balanced approach that includes tax increases on those best able to pay, so the burden doesn’t fall disproportionately on vulnerable families.  Unfortunately, New Jersey is poised to adopt an unbalanced approach.