Why the Working Families Tax Rebate would work for Washington

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Why the Working Families Tax Rebate would work for Washington

By - December 1, 2011

The Working Families Tax Rebate (WFTR) is one of the most effective tools for lifting families out of poverty. And under our current revenue system, it is the only tool Washington has for reducing taxes for low income Washingtonians.

To protect essential public structures in the short-run, it is critical that policymakers raise additional revenues quickly. However, within Washington’s current tax system there are few ways to raise progressive sources of revenue.

The way to raise revenue in the short-term is to increase the sales tax by a modest amount. As we outlined yesterday, there are several advantages to raising the sales tax. Aside from being able to quickly and easily raise revenue, pairing the sales tax increase with full funding for the WFTR would more than offset the costs to lower-and moderate-income families in Washington.

The WFTR is one of the most powerful tools to promote economic security:

  • It is modeled on the highly successful federal Earned Income Tax Credit, one of the most effective policies for lifting families out of poverty;
  • It benefits families with children, who have the highest rates of poverty compared to other age groups;
  • It makes the tax system more equitable by offsetting the impact of tax increases on low income families; and
  • A large share of Washington’s low income population – at least 400,000 families – will qualify.

The WFTR does not fix all of the problems with our inadequate and broken tax system, but it is the only tool we currently have to reduce taxes for low income families.

The Budget & Policy Center has long championed reforms that will make Washington’s revenue system adequate, sustainable, and fair. Until those reforms are put in place, the sales tax increase coupled with fully funding the  WFTR are a good solution for raising revenue in the short-term and protecting public investments that will ignite our economy and improve outcomes for Washington’s children and families.

Read more about the Working Families Tax Rebate here