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New analysis: Why StayNJ is even more regressive than at first glance
New analysis: Why StayNJ is even more regressive than at first glance

New analysis: Why StayNJ is even more regressive than at first glance
For immediate release

24 June 2024 – With the state budget deadline looming and major sticking points in property tax credit negotiations, a new analysis from New Jersey Policy Perspective (NJPP) reveals a serious and overlooked flaw in the new StayNJ program for older homeowners.

The analysis, Why StayNJ is even more regressive than at first glanceexplains in detail how StayNJ interacts with New Jersey’s other two property tax credits, ANCHOR and Senior Freeze, resulting in the highest-income senior households receiving higher payments.

As part of the new program combined StayNJ, ANCHOR and Senior Freeze benefits cannot exceed half of the property tax bill (up to $6,500).

Since the income eligibility for StayNJ (500,000 US dollars) is much higher than that of ANCHOR (250,000 US dollars) and the Senior Freeze (150,000 US dollars), the combined cap will result in low- and middle-income households losing their ANCHOR and Senior Freeze benefits subtracted of their StayNJ tax credit. Households with incomes above $250,000 receive the full StayNJ benefit.

“This program was already designed to benefit wealthy homeowners, but the way StayNJ interacts with other property tax credits makes it even more regressive,” said Peter Chen, senior policy analyst at New Jersey Policy Perspective (NJPP) and author of the analysis“The big winners here are households earning more than $250,000 who earn too much to qualify for other programs like the Senior Freeze. If the goal is to make government more affordable, we should focus aid on the families struggling the most. This is doing the opposite.”

Using hypothetical households – the Trentons, the Hamiltons and the Princetons – it illustrates how StayNJ interacts with other programs. The analysis shows how Two households with the same property tax bill would receive very different StayNJ tax credits depending on household income.

In this scenario, the Princetons would receive more from StayNJ than the Hamiltons, even though their household income is nearly twice as high. The Princetons would also receive a StayNJ tax credit more than eight times as high as the Trentons, even though they earn ten times as much.

The analysis also highlights three other ways in which StayNJ favors high-income households: the $500,000 income cap that applies to receiving welfare benefits; the exclusion of renters, who typically have lower incomes and fewer assets; and the linking of tax credits to property taxes paid, resulting in higher welfare benefits for more expensive homes.

The full analysis can be found here.

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New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that advances policy change through evidence-based, independent research, analysis and advocacy to advance economic, social and racial justice.

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By Seren