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After reading through the House Democratic leaders’ budget proposal, we have a few high-level takeaways:
1. It shows that House leaders are serious about taking steps to rebalance our upside-down tax code (with one important caveat). As we said in our previous analysis, the best part of the House budget is how leaders propose to fund investments in our communities: namely, by responsibly closing the tax break on capital gains enjoyed by the very wealthiest Washingtonians and making our real estate excise tax more equitable. These are smart policies that will start to rebalance our state’s upside-down tax code and ease structural problems with our tax code for generations to come. The capital gains tax in particular will help to undo the legacy of wealth inequities that exist because of historically racist policies and systems.
The caveat: The House’s budget does little to fix the tax code for working families who are currently shouldering more than their fair share. While House leaders’ proposal to tax capital gains profits and high-value real estate would go a long way toward ensuring those at the very top are chipping in, it doesn’t actually do anything to rebalance our tax code for low- and moderate-income households. Funding the Working Families Tax Credit would provide a targeted tax break to thousands of low- and moderate-income working families struggling to keep up with the rising cost of living. To rebalance the tax code, we must address the top end of the income scale, as well as the bottom and middle. Failing to fund the Working Families Tax Credit is a huge missed opportunity in the House budget.
2. It includes smart investments to maintain current services, and makes some incremental improvements. In addition to prioritizing higher education, mental and behavioral health, and early learning:
3. There’s more work to be done, especially for those furthest from opportunity. Once again, the House is proposing to cut nearly $20 million from the WorkFirst/Temporary Assistance for Needy Families program – which provides cash assistance and supportive services to low-income families with children – to fund other parts of the budget. This cut is the result of the continuation of harsh time-limit and sanction policies, which push low-income families off WorkFirst even when they face crises like homelessness and mental illness – and disproportionately harm Black and Native American families.
The House budget does, however, provide $2 million to undo WorkFirst’s severe permanent disqualification policy, which bars families who face barriers to meeting program requirements from getting the support they need from the program. This is a first step toward reversing damaging cuts to the program. When the Senate releases its budget, it should build on the House’s proposal by removing all of the harsh sanctions that are currently cutting families off WorkFirst.