Monday, June 24, 2024
HomenewsThe Low-income Tax Credit for Washington, Introduced in 2008, is Now Available

The Low-income Tax Credit for Washington, Introduced in 2008, is Now Available

Hundreds of thousands of low-income working families in Washington now have access to up to $1,200 as a result of a 2008 law that is now, 15 years later, being funded for the first time.

The funding comes from the Working Families Tax Credit, a state program designed to give workers at the bottom of the economic scale a small financial boost because they in Washington pay a much higher percentage of their income in state taxes than do the wealthy.

The recently funded tax credit is available to close to 400,000 households, including close to 100,000 in King County. However, the state’s Department of Revenue estimates that only about 40% of those who are eligible will receive it the first year because eligible families must apply to receive it.

The state expects to issue refunds totaling about $230 million this year and $257 million the following year. Christine Gregoire, the governor, signed the tax credit into law in 2008.

However, it was useless. No one received any tax credits at all. To avoid adding to the budget deficit, lawmakers said at the time that they would figure out the funding for the tax credits later.

The time it took to revisit it was more than ten years. State legislators finally approved funding for the tax credits in 2021, flush with assistance from the federal government’s emergency COVID packages.

The popularity of the payments to individuals included in the COVID stimulus packages, according to lawmakers at the time, highlighted the importance of cash assistance for working families.

The three different checks totaling $1,200, $600, and $1,400 that were approved under both the Trump and Biden administrations as part of the COVID program were lifesavers for Nijhia Jackson, 38.

The Low-income Tax Credit for Washington, Introduced in 2008, is Now Available

Jackson, an Olympic College student, works as a cashier at the Tacoma Dome and resides in Bremerton with her husband and two young sons.

When her boys had to travel for school, she used the COVID money to pay for their internet service. She also paid the rent with it.

Jackson stated on Wednesday, “I was able to buy school clothes and shoes for my kids to wear instead of rummaging through items at Goodwill.” The new tax credit, which will be given as a refund on sales taxes paid, will probably give her family $900.

She added, “I know this would be great after getting those payments. Again, she intends to spend money on her internet subscription, children’s clothing, and “maybe” a car repair.

According to John Ryser, acting head of the state Department of Revenue, “this money can support families in whatever their financial needs may be.” He called it “a step in tackling intergenerational poverty and equity in the state.”

Some Recent News You Might Like:

On Wednesday, the first day the tax credit was available, Ryser claimed that 10,000 people submitted applications.

According to Emily Vyhnanek, campaign manager for a collection of approximately 50 charity organizations, labor unions, and progressive advocacy organizations that advocated for the tax credit, “Our message today is fairly simple.”

“Please don’t miss out if you, your family, your friends, your neighbors, or your community earned less than $60,000 last year. You might be qualified for as much as $1,200.

The federal Earned Income Tax Credit, which provides funds to working families with low and middle incomes, is the model for the program. The EITC is offered in 32 other states as well, but Washington is the only one that does not have a state income tax. This has made managing the tax credit a little more challenging.

To manage the initiative, the Department of Revenue established a new division and assigned 82 full-time workers to it. For the upcoming two-year budget cycle, it is anticipated that running the program will cost around $27 million.

The state’s general fund will be used to pay the rebates, which range from $50 to $1,200 depending on family size and income.

The move to ultimately fund the program in 2021 was a part of state lawmakers’ efforts to make the state’s tax structure, which has long been regarded as one of the most regressive in the nation, more equitable for those who earn less.

The Low-income Tax Credit for Washington, Introduced in 2008, is Now Available

Since there is no state income tax in Washington, the state heavily relies on the sales tax, which is levied at the same rate on everyone, rich and poor.

The largest disparity in the nation, according to a 2018 study by the Institute on Taxation and Economic Policy, was found in Washington, where the poorest families paid about 18% of their income in state and local taxes while the wealthiest families paid only about 3%.

Therefore, the Working Households Tax Credit was established by the Legislature in 2021 with enormous bipartisan majorities to lessen the tax burden on low-income families.

At the same time, Democrats passed a capital gains tax that targets the wealthy and levies a 7% tax on profits from the sale of assets like stocks and bonds that exceed $250,000, all without the support of Republicans.

The validity of the capital gains tax is currently being discussed by the Louisiana Supreme Court. The tax credit is currently being discussed in Olympia to expand and increase its generosity.

House Bill 1000, a Republican initiative led by Rep. Drew Stokesbary, would increase the income threshold, extending eligibility to hundreds of thousands more people, including some middle-class households. Additionally, it would increase all eligible families with at least one child’s benefit levels by a factor of two.

House Bill 1075, a Democratic proposal led by Rep. My-Linh Thai, would be a more moderate extension that would open the credit to anybody over the age of 18 who meets the necessary income standards. Even if they match the income requirements, individuals between the ages of 18 and 25 who do not have children are now disqualified.


Most Popular