Federal Tax Decisions Will Have Major Impact on Washington State Families
A number of important federal tax policies are set to expire at the end of the year, and the decisions Congressional leaders make will have far-reaching impacts for all Washingtonians.
One is the federal estate tax, which is currently paid by only the wealthiest 0.3 percent of estates nationwide. In 2010, Congress agreed to a temporary extension of the estate tax rules enacted under the Bush Tax Cuts of 2001 and 2003. If those rates are extended permanently, as some have proposed, the federal budget deficit would grow by $141 billion over ten years according to a new report from the Center on Budget and Policy Priorities. This is significant revenue that could be used instead to support job creation efforts and help provide long-term budget stability. In Washington State, 110 estates – only extremely wealthy residents – would benefit from the extension.
Congress will also consider extending improvements made to three tax credits that benefit millions of working families. As part of the same legislation that approved the temporary estate tax cut, important improvements were made to the Earned Income Tax Credit, the Child Tax Credit and the American Opportunity Tax Credit. These credits provide critical support to 25 million families, giving workers with kids a significant boost to their incomes and making college more affordable for middle class Americans. If Congress fails to extend these measures 246,432 working families in Washington State will lose out on key benefits that help build long-term economic security and expand opportunity.
As many Washingtonians continue to struggle to make ends meet in the slow economic recovery, the choices before Congress are clear. It would be fiscally irresponsible to continue estate tax rules that benefit only a handful of the wealthiest Americans at the expense of pressing national priorities. Congress should extend the improvements to three proven tax credits. Failure to do so would harm our fragile recovery and threaten the economic security of thousands of Washington families.
You can find the full report from CBPP here.