Washington state has the most upside-down tax code in the nation: for years, we have ranked as having the number one worst tax code in the U.S. Families living on the lowest incomes pay up to six times more as a share of their income in taxes compared with the wealthiest Washingtonians. This tax system exacerbates the racial wealth gap created by long-standing barriers to put in place to prevent families of color from accessing housing, education, and employment opportunities.
What We’re Doing About It
Poverty Action supports a re-balancing of the tax code by funding and modernizing the Working Families Tax Credit.
The Working Families Tax Credit, which became law in 2008, is Washington state’s version of the Earned Income Tax Credit, which is the federal government’s most successful program at reducing poverty. Yet, the state legislature has never funded the Working Families Tax Credit in the budget, missing a vital opportunity to re-balance our tax code for low- and moderate-income Washingtonians. If implemented, the Working Families Tax Credit would refund a portion of the state sales tax – an average of $350 to eligible households — thereby boosting families’ economic security, helping them make ends meet, and mitigating the impact of our state’s regressive tax structure. We propose:
- Providing at least a 15 percent match of Washingtonian’s credits through the federal Earned Income Tax Credit
- Expanding eligibility to workers without children age 19 and up
- Using a modern definition of work to include low-income higher education students and people who care for young children, adults with disabilities, and seniors
- Recognizing immigrant workers who are not eligible for the federal EITC as eligible for the state tax credit
How would an extra $350 help you financially? We’re collecting stories from community members about how the funding of a Working Families Tax Credit could help them. Submit your story here.