The state’s successful and revolutionary Child Tax Credit (CTC) program provides up to $1,000 per child under age 6 to tax filers earning up to $80,000 (Source: Senate and General Assembly of NJ).

However, this benefit still falls short of the needs of children statewide. New Jersey faces higher child care, housing, and health care prices than other states, and families often need extra assistance to meet basic needs (Source: Economic Policy Institute).

Tax experts estimate that a $2,000 annual credit for all ages of children would reduce child poverty by one quarter and assist nearly 1 million children and their families (Source: Institute on Taxation and Economic Policy).

New Jersey’s state Earned Income Tax Credit (EITC) is based on a similar federal credit designed to help low- and moderate-income workers get more money back in their tax refund. The average state credit was $724 for the 650,000 eligible households in 2021 (Source: State of New Jersey).

Although the EITC has been a successful part of New Jersey’s anti-poverty programs since 2000, it could be improved further by increasing the benefit amount, currently set at 40 percent of the federal credit, and by expanding eligibility to individuals with Tax Identification Numbers.

The District of Columbia (70 percent of the federal credit) and Maryland (45 percent of the federal credit) both have EITC amounts higher than New Jersey’s and provide 100 percent of the federal credit to childless workers (Source: Urban Institute).

New Jersey residents without a Social Security number cannot collect this benefit even though they pay taxes. (Source: New Jersey Policy Perspective)

TANF is a cash assistance program to help families in deep poverty meet their basic needs and climb out of poverty. But functionally, red tape and restrictions within the program have made it increasingly inaccessible for households who need it most. What is worse, only 6 percent of New Jersey’s TANF program funding went as cash payments to low-income households and families, far less than the 23 percent spent nationally (Source: Center on Budget and Policy Priorities).

TANF needs several major improvements to modernize access, such as redefining income and asset limits to exclude child support, retirement accounts, and tax credits; reforming time limits for how long recipients can collect benefits; and smoothing off-ramps to ensure households don’t churn back into poverty after they exit the program. (Source: New Jersey Policy Perspective).

The Supplemental Nutrition Assistance Program (SNAP), formerly food stamps, provides cash-like assistance to households to purchase groceries. During the pandemic, the federal government provided “emergency allotment” SNAP benefits, which expired in March 2023 (Source: New Jersey Department of Human Services).

States accepting the extra assistance had significantly lowered food insecurity than states who refused. Still, these rates converged after the end of the extra assistance. (Source: U.S. Census Bureau).

In New Jersey, the average SNAP recipient lost $97 per month, or roughly one-third of their total benefit, when the emergency allotment expired (Source: Center on Budget and Policy Priorities).

New Jersey can and should provide a state supplement to the federal SNAP allocation to ensure no family goes hungry.

Mountains of paperwork, demanding income verification, and an alphabet soup of agencies and acronyms make applying for the existing cash assistance and benefits programs nearly impossible for low-income individuals (Sources: Center for American Progress).

One of the largest such programs is the subsidized housing voucher program, but the program has systemic problems, including low supply, high administrative burdens, and insufficient enforcement of affordable housing laws (Sources: NorthJersey.com and Center on Budget and Policy Priorities ).

Beyond housing, losing benefits such as child care, food assistance, and other public benefits can be catastrophic for families. Again, the policy response to the pandemic has demonstrated that eliminating and waiving certain administrative requirements such as in-person interviews and redeterminations can ensure seamless service delivery and increase program usage (Source: American Review of Public Administration).

To the extent possible, these programs should shift to determining eligibility based on existing participation in other programs, i.e. “categorical eligibility,” rather than burdensome income and asset verification requiring separate paperwork to verify for each program (Source: Yiyu Chen, California All Kids).

The Child Tax Credit and Earned Income Tax Credits can provide thousands of dollars to eligible families. However, many eligible households do not file taxes, and even those who do may not know they qualify for these credits (Source: Internal Revenue Service).

This results in many families failing to receive essential benefits administered through the tax system. For example, middle-income families were much more likely to claim the federal CTC than low income families. (Source: Urban Institute).

But almost all data needed to file most residents’ taxes — such as income and family size — is already on file with government agencies. Rather than place the onus on residents to file, New Jersey’s tax agencies can begin free pre-populated tax filing to streamline the process and encourage more low-income residents to collect the tax credit benefits they are entitled to. Other states, such as California, have used pre-populated forms in the past, while the federal government has also begun preliminary steps to automate tax filing (Sources: The Hamilton Project and Associated Press / PBS Newshour).

Tax filing should be broadly streamlined, but reducing the filing paperwork burden is an important step to getting tax benefits to all eligible residents.

Program applications are frequently onerous and require duplicative information already collected by other agencies. Yet the administrative burden falls on families and individuals to apply for various programs, resulting in nearly one-quarter of people living in poverty not receiving basic benefits (Source: Urban Institute).

For example, the majority of states have agreements between Medicaid and SNAP agencies to share data and encourage enrollment, while New Jersey is still developing a plan to do so (Source: Center on Budget and Policy Priorities).

This limited coordination leads to New Jersey sitting in the bottom half of states in the percentage of low-income households receiving any public cash or cash-like benefits (Source: Urban Institute).

Annual cash payments through the Child Tax Credit and Earned Income Tax Credit can help families raise children in the short term. But long-term wealth accumulation requires larger one-time transfers, such as a “baby bond” that matures when a child becomes an adult. Such a program should follow the proposal outlined by the New Jersey Institute for Social Justice, which would allow young adults ages 18 and 35 to help finance post-secondary education, make a down payment on a home, or start a small business (Source: Harbani Ahuja, New Jersey Institute for Social Justice).

With the success of the Newark guaranteed income pilot, New Jersey can build on these pilots in other economically distressed communities that have struggled with historic disinvestment (Source: City of Newark).

The Newark guaranteed income pilot had 430 participants. (Source: City of Newark)

These pilots could also be tied to particular populations, such as youth aging out of foster care, people experiencing housing insecurity, or people who are pregnant, to study how payments can better assist these groups (Sources: Giselle Medina, LA Times and Ryan Dwyer, National Academy of Science and Sarah Holder, Bloomberg).

Additional data could help identify solutions to common barriers to guaranteed income programs.

Setting up a guaranteed income system for New Jersey would be complex and require input from diverse perspectives. Therefore, NMEE suggests appointing a task force of experts to address the difficult questions of how state government could implement such a program, such as how to:

• Convert tax credit payments to monthly or biweekly payments.
• Ensure that other benefits programs treat guaranteed income payments as exempt from income and asset requirements.
• Estimate costs for different eligibility criteria and benefits amounts, as well as program administration.

This task force would have to include representatives from all relevant agencies as well as community members, multidisciplinary policy experts, direct service providers, and community groups and advocates who support families and individuals in poverty.

Creating a guaranteed income program may be difficult, but the magnitude of the task signals how important it is to complete. A solution to New Jersey’s entrenched poverty exists if the state is willing to invest in it.