Don't leave the poor behind in tax reform

Property tax relief is essential in New Jersey and in many cases it will be an anti-poverty measure for moderate- and middle-income households. However, in attempts to fix property taxes, it is important to recognize that for New Jerseyans with the lowest incomes, property tax relief alone means nothing.

New Jersey is one of the most expensive places in the country to live, given the high costs associated with housing, child care, health care and transportation.

It is estimated that a person is considered poor in this state if they earn less than twice the Federal Poverty Level. More than 1.8 million people in New Jersey - over 20 percent of our population - have household incomes at or below this level. Most of these people earn low wages, but play a crucial role in the state's economy. Among them are health-care aides, office workers, teacher's assistants, sales clerks and a whole spectrum of other service providers that most of us depend on every day.

Very few people with incomes at this level can afford to own or buy a home.

Most low-wage households can only manage to rent an apartment or house. To suggest that landlords will use a reduction in property taxes to lower or even stabilize rents is simply not borne out by history or experience. Rents fluctuate based on what people are willing to pay, not just on the costs incurred by the landlord. In the present market, it is unlikely that any reduction in property taxes will decrease rents paid.

In the current debate centering on property tax reform, state lawmakers need to take account of the growing problem of poverty in New Jersey. The Legislature needs to be concerned about the impact taxation has on everyone, so they need to consider comprehensive tax reform that leaves no one behind.

There are several things the Legislature could do. One worthy pursuit would be to revisit a change in the income tax threshold, as put forward earlier this year by Gov. Jon Corzine.

In the state budget submitted in March, the governor proposed that people with an annual income of $25,000 or less would pay no state income tax on their earnings (the current guideline exempts those earning less than $20,000).

For those earning between $25,000 to $30,000, a proportionate reduction of the income tax rate was proposed. Unfortunately, this proposal was removed from the state budget early in the negotiation process. Regrettably, at the same time, the tax burden on low-income households went up with a 1 percent rise in the sales tax.

In addition, the Legislature could find ways to expand the New Jersey Earned Income Tax Credit (EITC), which has proven to be of great benefit to low-income households. The formula for this program has not been revised since the program was initiated six years ago, and it does not currently match the guidelines of the Federal Earned Income Credit. Changing New Jersey's EITC to match federal guidelines could add hundreds of dollars a year to the income of the state's lowest income households.

Changes such as these are among the strategies the Legislature could embrace to move in the direction of tax relief for all.

It is important to recognize that property and home owners are not the only people in New Jersey struggling with the high cost of living here. A significant number of people worry about meeting the most basic needs of shelter, nutrition and health. These households deserve attention as law makers consider tax policy. Let's not leave them behind.

the Rev. Bruce H. Davidson

Director

Lutheran Office of Governmental Ministries

Co-convener of the Anti-Poverty Network of New Jersey

Trenton