Modernizing the Working Families Tax Credit would rebalance the tax code, grow local economies, and help workers thrive

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Modernizing the Working Families Tax Credit would rebalance the tax code, grow local economies, and help workers thrive

By - August 14, 2018

In an inclusive economy, all Washingtonians would have access to economic security and the opportunity to prosper. Even though Washington’s economy is growing, progress isn’t reaching everybody. Income inequality is increasing, and too many people are still struggling to make ends meet – even those who work full time. This is especially true for many workers and families of color, who have long faced greater barriers to opportunity than their white neighbors – the result of historically racist policies and practices.

Our state’s upside-down tax code – in which people with low and moderate incomes pay up to six times more in state and local taxes as a share of their income than the wealthiest 1 percent – exacerbates these inequities. As a result, working families can’t keep up with the rising cost of living and housing, and many are pushed further into poverty.

Our new brief, “Promoting Economic Security through Commonsense Tax Reform,” provides a road map for how to make our tax code work for working people. It lays out our proposal to modernize and expand the Working Families Tax Credit*, our state’s version of the federal Earned Income Tax Credit (EITC). This modernization and expansion would transform our tax code from one that holds back hardworking but low-paid Washingtonians to one that promotes economic security. Ultimately, it would increase opportunities for working families to get ahead, mitigate the effects of historically racist policies, and strengthen the economy. Lawmakers can make lasting positive impacts on the well-being of Washingtonians by enacting this real, commonsense reform to our tax code.

Promoting Economic Security through Commonsense Tax Reform” is the third publication in our Progress in Washington 2018 series. This series examines the ways our state can reach the goal of an inclusive Washington state economy with shared prosperity for everyone.

*Editor’s note, 12/7/2018: The name of the policy has changed to Working Families Tax Credit since the original publication of this post and brief. Reference to the Working Families Tax Rebate has been updated accordingly.

About Kelli Smith, Senior Policy Analyst

Kelli is part of the research and policy team at the Budget & Policy Center, and she focuses on state budget and revenue policy.

Read more about Kelli