Working Families Tax Rebate: A Wise Investment in Families and Communities

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Working Families Tax Rebate: A Wise Investment in Families and Communities

By - April 28, 2010

The Washington Policy Blog takes issue with money set aside in the state’s budget to administer a tax cut that will benefit some of the working families hit hardest by the recession. To set the record straight, here’s some information they left out:

  • Once the Working Families Tax Rebate is fully funded and implemented, it will refund a portion of the state retail sales tax to as many as 370,000 Washington households. About 97 percent of the total would flow to working families with children;
  • Though some state funds are needed to begin the program, it will build on the federal Earned Income Tax Credit (EITC), so that everyone who is eligible for the federal credit will also be eligible for the state rebate. The benefit of building on the EITC is that the IRS does a significant portion of the administration and enforcement. They will annually send a database to DOR which will contain a list of all Washington households who received the EITC and are therefore eligible for the state rebate. The database will also include the amount of EITC received by each family. The state rebate will simply be calculated as a straight percentage of the federal credit;
  • Twenty-three states (including the District of Columbia) have a state EITC that is administered as a percentage of the federal credit. The Working Families Tax Rebate would give working families in every community – particularly in rural and small metropolitan areas – an income boost. Experience in other states suggests that implementation of a state tax credit will spur more families to sign up for the federal EITC, bringing additional money into Washington homes and communities;
  • We’ve created a calculator to show how much the credit would be worth if it was in place today based on the number of children and the amount of earned income.** For example, a married couple with two kids and $20,000 in wages would receive $429 dollars. A single parent with one child would receive $248. The minimum credit for those who are eligible is $50; the maximum is $567.

For more information, please see our primer on the rebate.