Important progress happening on tax justice and racial justice

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Important progress happening on tax justice and racial justice

Now policymakers must move key bills forward to sign into law

March 11, 2021

This week marked historic action on two of the Budget & Policy Center’s policy priorities that will help advance racial equity and support the well-being of Washingtonians through our state’s economic recovery. Lawmakers moved forward two long overdue tax justice policies that would help make Washington’s worst-in-the-nation tax code more progressive and racially equitable – the Working Families Tax Credit and a tax on extraordinary capital gains profits.

On the final day of the house of origin cutoff (the last day the Washington state legislature considers bills in the House and Senate), the House of Representatives held an unprecedented bipartisan vote to support working people by nearly unanimously passing House Bill 1297, the Recovery Rebate/updated Working Families Tax Credit bill. This policy would put cash in the pockets of approximately 500,000 people in our state who need some support making ends meet.

Importantly, this bill championed by Representative My-Linh Thai also makes key updates to the original policy (passed in 2008 but never funded) by nearly doubling the cash amount a recipient of the credit would receive and ensuring that Individual Taxpayer Identification Number (ITIN) filers are included. Washington would be the fourth state to make this important expansion to ITIN filers, a group of taxpayers that includes undocumented workers and some survivors of domestic violence, who are unjustly excluded from the federal version of the Working Families Tax Credit – the Earned Income Tax Credit.

The Working Families Tax Credit is our promise to the people of Washington, a promise to people like my parents, that if they work hard, they can achieve their dreams, build better lives for their children, and their community will rise up to support them.

– Representative My-Linh Thai, bill sponsor, in her House floor testimony

Lawmakers also listened to the voices of communities and took an historic vote to make our tax code more equitable and fund critical community investments by passing a capital gains tax out of the Senate for the first time ever. If implemented, Senate Bill 5096 will be the most equitable change to our state’s tax code in almost 90 years. It would affect only 0.2% of Washington’s wealthiest taxpayers, but raise more than $500 million annually to invest in child care and tax fairness.

During this economic crisis when so many people and communities don’t have the resources they need – and while many of the ultra-wealthy are profiting from the pandemic – Democratic lawmakers rightly passed this policy to make our tax code more equitable and to invest in communities. This excise tax on capital gains will ensure that the state will have the resources needed to support community needs and bolster economic recovery for years to come.

What [the tax on extraordinary profits] will mean is the ability to better invest in our children, in our schools, in our health care, in our roads, in our safety. It means investing in opportunities for our neighbors. It means building a brighter tomorrow.

– Senator June Robinson, bill sponsor, in her Senate floor testimony

But the work isn’t done. Communities across Washington are now counting on lawmakers to keep up the momentum and take bold action to move the state beyond an inequitable status quo. We urge lawmakers to listen to the groundswell of voices across the state and within the many organizations working tirelessly to support these bills through the legislative process.  We must all keep on the pressure to get these important policies to the governor’s desk and signed into law.