by Margaret Babayan and Emily Vyhnanek
Last week, in a historic win for Washingtonians, the legislature passed House Bill 1297, an updated version of our state’s long-unfunded Working Families Tax Credit, with overwhelming bipartisan support. This targeted tax credit, which will provide an annual cash rebate to nearly 1 in 6 households with low and moderate incomes, will soon be signed into law by Governor Jay Inslee.
An earlier version of the credit initially passed the legislature in 2008 thanks to the efforts of many anti-poverty advocates, but amid state budget cuts during the Great Recession, it was never funded.
In the past few years however, a statewide coalition of more than 45 organizations formed to rekindle and strengthen advocacy efforts to get direct, flexible cash to Washingtonians and to expand eligibility to include more immigrants. The diverse coalition represents economic and racial justice groups, immigrant rights advocates, small business incubators, labor organizations, direct service providers, domestic violence advocates, research organizations (like the one we work for: the Washington State Budget & Policy Center), and more.
At the center of this coalition’s advocacy were people who would qualify for this rebate sharing their stories in legislative testimonies, the media, and on social media — emphasizing the huge difference a few extra hundred dollars a year would make in their lives. Lawmakers heard from people across Washington who would be able to afford medicines they’ve put off taking, pay for much-needed car repairs, and get new clothes for their growing kids. The prime sponsor of the bill, Representative My-Linh Thai, and champion Senator Joe Nguyen, shared their own stories of how their immigrant families would have benefited from a policy like this.
Advancing the Working Families Tax Credit in the midst of COVID-19’s economic fallout is a dramatic rejection of what happened during the Great Recession. At that time, state lawmakers slashed funds in the budget to cash assistance programs and community investments. They also held fast in preserving our state’s regressive and racist tax code. These decisions deepened racial inequities and continued to channel the state’s wealth to wealthy, largely white households. They also left our state with a chronically underfunded budget that is just now catching up to pre-recession levels adjusted for economic growth.
The updated Working Families Tax Credit, or Recovery Rebate, will provide an annual tax credit of $300 to $1,200, depending on household size (and that phases down as incomes reach the upper end of eligibility). The credit will have an outsized impact on Black, Indigenous, and People of Color in our state, who make up 25% of the state’s population and 36% of credit recipients. In addition, this tax rebate begins to correct economic inequities by focusing on households with low and moderate incomes — the same people in our state who currently pay up to six times more in taxes as a share of their incomes than the ultra-rich.
Washington state now joins 29 other states and the District of Columbia in providing this type of state-level match to the federal Earned Income Tax Credit or EITC.
Notably, Washington state’s Working Families Tax Credit differentiates itself from many other state’s programs in ways that make it more equitable than others. The rebate is structured to provide a flat base payment that phases down as households reach the maximum qualifying income, removing a benefit phase-in that exists in the federal EITC and all other state-level equivalents. This important update ensures those in households with the lowest incomes receive the maximum credit.
In addition, Washington state is now one of only five states that includes Individual Tax Identification Number (ITIN) filers in its state-level program. ITIN filers are an important group of taxpayers that includes undocumented immigrants, some survivors of domestic violence, certain student visa holders, and others, who are unjustly excluded from nearly all tax benefits.
Including ITIN filers is part of a growing national movement to make cash assistance more inclusive of immigrants. The Working Families Tax Credit Coalition kept this commitment to immigrant inclusion front and center in our advocacy. And unlike other states in which eligibility for ITIN filers passed largely along party lines, the coalition’s unwavering commitment to this critical expansion resulted in near-unanimous passage in both the House and the Senate.
The funding and expansion of the Working Families Tax Credit amid our current economic pain illuminates an alternate way our state can respond to economic downturns — as well as deeply persistent inequities. Funding a more inclusive Working Families Tax Credit alongside other budget proposals to increase cash assistance through Temporary Assistance for Needy Families and add $340 million to the Washington Immigrant Relief Fund for immigrants barred from federal stimulus payments are just a few examples. This economic progress must be paired with an interrogation of spending that harms communities — like prisons and policing. It must also be combined with equitable revenue sources — like a capital gains tax on extraordinary profits — to fund priorities that advance racial and economic justice.
The passage and funding of the updated Working Families Tax Credit is a critical win. Let’s build on this success by continuing to shape an inclusive economy for everyone in our state.
Margaret Babayan is a senior policy analyst at the Washington State Budget & Policy Center.
Emily Vyhnanek is the Working Families Tax Credit campaign manager at the Washington State Budget & Policy Center. The Washington State Budget & Policy Center is an organization that works to advance the economic well-being of people in Washington.
📸 Featured Image: Photo of a young child holding a sign at a 2018 Families for Families rally in Seattle, Washington. (Photo: Susan Fried)
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