State Senate President Stephen Sweeney has thrown his support behind a bill to raise the Earned Income Tax Credit.
TRENTON -- State Senate President Stephen Sweeney said Tuesday he will fast-track a bill to raise the tax credit for low-income workers in New Jersey, giving the state one of the most generous credits in the country.
The effort matches a similar increase the state Assembly passed in March, raising the much-lauded Earned Income Tax Credit from 30 percent of the federal limit to 40 percent.
"So often the people who are struggling and languishing in this state go unnoticed," said state Sen. Shirley Turner (D-Mercer), who sponsored the legislation. "They are the ones who are still lagging behind in this so-called recovery."
Last summer, the Legislature and Gov. Chris Christie raised the tax credit from 20 percent to 30 percent of the federal level, returning another $200 a year to the average family.
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That expansion was estimated to cost about $120 million and restored Christie's 2010 cut from 25 percent to 20 percent of the federal limit, and then went further.
This additional hike would cost another $120 million and return an average of $225 to 525,000 to New Jersey families.
That is money they will reinvest in the local economy, Turner said, noting "they will not put it in the bank. They will not put it in CDs. They will spend that money and they will create new jobs."
A few hundred dollars extra can "create a little breathing room" for for families whose budgets can be thrown into crisis by an unexpected car repair, anti-poverty advocates said.
While declining to directly link the proposed hike to talk in Trenton about raising the gas tax, Sweeney (D-Gloucester) said any demands of "tax fairness" must begin with a raise in the EITC.
"Tax fairness" is a phrase coined by Christie, who said he wouldn't agree to a gas tax hike to raise money for transportation projects without cuts elsewhere.
The Transportation Trust Fund, which pays for road and rail projects across the state, will run out of money for new projects this summer, but lawmakers have yet to strike a deal on a new funding source.
Democrats and Republicans have offered up several tax policy proposals, including higher tax exemptions for retirement income, elimination of the estate tax and a tax deduction for charitable giving.
Sweeney said at a Statehouse news conference Tuesday that the state must first bring along those who are hurting the most.
In a report released last year, New Jersey Policy Perspective, a left-leaning think tank, said increasing the gas tax would have a disproportionate effect on the poorer households that already are paying a larger share of their income in taxes.
A gas tax hike would cost households earning less than $45,000 a year a larger share of their income than any other income level, according to the NJPP report.
State Assembly Speaker Vincent Prieto (D-Hudson) also said "tax fairness" should mean providing relief for low-wage workers.
"I've said all along this progressive bill represents real tax fairness and should be the centerpiece of our effort to combat poverty," he said in a statement. "... Hopefully we can now get this bill to the governor's desk sooner rather than later."
Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.