For N.J. Working Poor, Much-Needed Tax Break May Be On Way

Newsday — Thursday, March 1, 2007

Associated Press Writer

TRENTON, N.J. — Close hasn't been good enough for Daisy Quiroz.

The single mother of two makes $24,000 a year working at a Newark nonprofit, yet that was still too much money to qualify for a state tax break meant to help working poor families.

"It really is frustrating," she said. "There's nothing you can afford."

But the 27-year-old social worker is among thousands of New Jerseyans who would benefit under Gov. Jon S. Corzine's plan to expand that tax credit. If the plan is implemented, she'll get back $579 from the state next year.

"It would mean a lot," she said. "We hardly can live off what I'm working for right now. It's three people in the household and it's very hard."

The state's Earned Income Tax Credit helps residents who work but earn less than $20,000 annually. The aim of the credit is to make the working poor more self-sufficient, thereby lessening the burden of Social Security and Medicare taxes.

But a recent report by New Jersey Policy Perspective, a liberal think tank, found that New Jersey's $20,000 limit is the lowest among the 19 states that offer the credit.

The federal government also offers an income credit for families who make up to $38,222 per year to qualify.

In 2005, about 486,000 New Jerseyans got the federal credit, but just 203,000 of them were able to also get state help.

Corzine wants to match the state's credit with the federal one. Doing so would enable 292,600 more workers to benefit, and cost the state $64 million next fiscal year.

New Jersey Policy Perspective President Jon Shure said strengthening the state income credit is the right thing to do.

"It's a powerful tool that helps working families and pumps money into New Jersey's economy," he said. "The people who will get this won't put it in a Cayman Islands bank account. They will buy things they need right here in New Jersey. It's win-win."

For Quiroz, who has a 5-year-old daughter and a 4-month-old son, and who faces a $1,600 mortgage, the help would be vital.

"Parents who have children, of course, you have to think often about their future, so they could benefit from that," she said.

However, the Internal Revenue Service estimates that about 11 percent of eligible credits go unclaimed.

Quiroz got help this year doing her taxes through New Jersey Citizen Action's Newark office, a citizens' group.

Phyllis Salowe-Kaye, the group's executive director, said it hopes to help 1,000 people prepare their taxes this year. The pilot program is designed to help the poor avoid spending money on tax preparers and obtaining instant refunds that cost them money in the long-run.

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