Tax Credit

Congressional Republicans are moving to scale back a major tax benefit for the working poor, even as they strive to expand tax breaks for wealthy investors, businesses and middle-class parents. Called the Earned Income Tax Credit, the $20 billion-a-year program uses the tax system to pay low-income working families with children up to $2,528 a year. Under current law, the maximum benefit for a family with two or more children is scheduled to rise to $4,320 by 2002. A Senate plan released Friday would roll that back to $3,888.

The mayors of three Camden County municipalities yesterday joined the campaign led by state Community Affairs Commissioner Leonard S. Coleman Jr. to have New Jersey's tax credit act repealed, raising an additional $140 million annually that would be meted out to financially strapped cities and towns. "We're facing a crisis, no question about it. We need funding, and I feel strongly that the (tax credit) should be repealed," Coleman said, referring to the Homestead Tax Relief Act. The program, which began last year, permits homeowners and tenants to deduct the full amount of their property taxes, or a portion of their rent, from their state income taxes.

Mayor Rendell said yesterday a new federal law would prompt employers to hire young people who live in the city's empowerment zone. The law will give employers a 35 percent tax credit off the first $6,000 in wages paid to young people who live in any of the nation's 72 empowerment zones and enterprise communities, part of two federal anti-poverty programs. The new credit is in addition to millions in grants and business tax credits already available in the zones and communities.

TRENTON - Two Bergen County Democrats went on location to Fort Lee - the one-time capital of the motion picture industry - to launch their latest appeal for renewal of a tax credit for production companies that make movies or television shows in New Jersey. Sens. Loretta Weinberg and Paul Sarlo say the Film and Digital Media Tax Credit Program creates jobs and drives the economy. The Christie administration maintains that tax credits have produced disappointing economic results. Gov. Christie suspended the credit after taking office, saving $10 million.

So I get a phone call from an angry reader who complains that the Housing and Economic Recovery Act's $7,500 tax credit to first-time buyers is a sham. "It's just a zero-interest loan!" the fellow shouts loudly into the receiver, as if I'm responsible for the actions of Congress. "The least they could have done was given us a gift!" Yes, the tax credit technically is a zero-interest loan that you will repay to the government over 15 years, starting two years after the credit is claimed, at $500 a year.

At a time when developers are under heavy pressure to spend more money in the city's poorer neighborhoods, a group in North Philadelphia has shown that companies can invest in low-cost housing while piling up fat tax write-offs. A tax incentive created during the tax overhaul of 1986 is making it easier for non-profit community groups to raise money and develop housing for low- income families by making such projects more attractive to businesses. "For any company that pays taxes, this is a dynamite business deal with obviuosly a very positive social spinoff," said Marie Nahikian, director of housing and economic development at National Temple Non-Profit Corp.

With a touch of theatrics and an eye toward his reelection, Gov. Christie used Monday's tax deadline to drop a revived tax-credit plan on the Democrats who control the Legislature. "Everybody who works and makes up to $400,000 would be getting a tax cut under this plan," the Republican governor announced. The plan would not cut property taxes for New Jerseyans, who have the nation's highest average property-tax bill. Instead, similar to a plan Christie unsuccessfully pushed last year, it links a 10 percent reduction in income taxes to how much a homeowner pays in property taxes, and restores Christie's previous cut in a tax credit for the working poor.

Liv Mansfield is racing the clock, hoping to find and settle, or at least sign a purchase agreement, on a townhouse before the $6,500 tax credit for qualified repeat home buyers expires April 30. While the credit is not as important as staying in the Wallingford school district, where her younger daughter will enter sixth grade next fall, Mansfield says it will help make expenses associated with the move "a wash. " "It will help with moving costs, and with getting this house ready for sale," said Mansfield, who has lived in the five-bedroom split-level Colonial she bought with her former husband nine years ago. The house, which she says is far larger than what "two people and a small dog need," will list for under $525,000 and heads for the market Feb. 15. Current homeowners buying a house between Nov. 7, 2009, and April 30 and who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight can qualify for the $6,500.

Car telephones for executives. Televison sets for media representatives. Air conditioners for asthmatics. And Live Aid tickets for rock fans. These are some of the items that may give the taxpayer a credit or a deduction on the federal income tax. Others include: Baby-sitting or child care costs for parents who do volunteer work. The deduction is limited to money spent while doing income-free work. Television sets, radios and VCRs, expecially for individuals employed in the media or the advertising industry.

I'm not sure how best to say this, since turning down cash in any form just isn't the American Way. But here it is: I really, really don't want the $500- a-child tax credit passed by the House of Representatives. Not that I couldn't have a lot of fun with the money. God knows I make less than the incredible $200,000-a-year income limit that assures most people in America will qualify for this tax break. But this tax giveaway is one of the most stupid proposals Congress has ever passed.