by Michelle Merriweather
A tax credit proposal in the Washington State legislature would mean almost 1 million Washington households – nearly 30 percent of our state’s population – could see a cost-of-living boost. If passed, the Working Families Tax Credit would have positive ripple effects throughout our community, supporting the economic well-being of African American communities throughout the Central District, south King County, and the entire region.
The Working Families Tax Credit would provide a state and local tax refund to people with low and moderate incomes, providing an average of $350 for individuals, and up to $970 for a family. Due to historically racist policies like redlining, employment discrimination and so many others, we know that people of color are more likely to face barriers to wealth and opportunity – and so are more likely to have lower incomes. That means the Working Families Tax Credit would have outsized positive impacts for people of color and provide opportunity for economic parity.
As the legislature focuses on solutions toward economic justice, it’s important to note that flexible financial assistance like the Working Families Tax Credit can help people stay housed, stay healthy, and start generational wealth. This will mean money going back to people in our community that can use the extra funds to cover rent, start an emergency savings account, or otherwise make ends meet as the cost of living becomes ever more unaffordable.
This state credit is modeled after the federal Earned Income Tax Credit, one of the most successful anti-poverty programs on the books. Research has shown that flexible financial support from such tax credits can improve health outcomes for mothers and infants, and lead to better health and well-being overall. They can also support better educational outcomes for children, including a higher likelihood of college attendance. When parents receive direct financial assistance, studies show they use it to provide resources that support their children’s healthy development. Research has shown that these positive benefits are even greater for families of color.
More than 27,800 Seattle neighbors receive the federal EITC. More residents would qualify for the Working Families Tax Credit. This state credit would extend to those most in need, including family caregivers, low-income workers without children, and low-income college students, who are currently excluded by the federal EITC.
The credit also addresses the racist, inequitable nature of our state tax code. In Washington, the lowest-income workers pay a disproportionately high share of their incomes – 18 percent – in state and local taxes. The wealthiest pay only 3 percent. That is not equity. The Working Families Tax Credit is a step in the right direction to fix this economic injustice – to take steps so our tax code stops relying on the people with the least to pay the most. It is our communities’ money, going back to its residents.
Currently, the Black community is struggling to build wealth and stay in their homes. Black borrowers are five times more likely to default on their student loan debt than white borrowers. Black women are seven times more likely to be evicted than white women. Having an extra $350 dollars can go a long way in the Black community to ensure hope and opportunity.
The Working Families Tax Credit, sponsored by Rep. Debra Entenman (D-47th) and Sen. Joe Nguyen (D-34th) is the right move for our communities. It would be monumental in our conversations about financial empowerment and budgeting with the clients who walk through our door at the Urban League. Many often feel discouraged because they don’t have the money to start a savings account or make an investment. Adding this tax credit would allow for the conversations to change and offer hope for families’ financial futures.
So many people served by the Urban League are struggling to keep up with our state’s skyrocketing cost of living. That’s why the Urban League is among more than 30 organizations throughout the state, including OneAmerica, Statewide Poverty Action Network, All In For Washington, and the Washington State Budget & Policy Center, that are calling on lawmakers to enact the Working Families Tax Credit this session. It is a critical investment in our communities and an important move toward greater economic justice.
Michelle Merriweather is the President and CEO of the Urban League of Metropolitan Seattle, a nonprofit with 90 years of activism and community experience in the heart of Seattle’s most diverse neighborhood, the Central District. The Urban League empowers African Americans and underserved communities to thrive by securing educational and economic opportunities. To find out more visit www.urbanleague.org.
Featured image by Sounder Bruce