How the Working Families Tax Credit Fights Poverty

A state’s tax code is a representation of its values. Unfortunately, our state’s tax code reveals an ugly truth: immigrant and refugee communities and low to middle-income communities like ours are not a priority.

The Institute on Taxation and Economic Policy published a comprehensive report on tax fairness in all 50 states. They found that Washington is number one: our state has the most unfair tax code in the nation. This means Washington residents who earn the least pay the largest percentage of their income in taxes, up to 18%, while the wealthiest 1% of Washingtonians pay only 3% of their income. Low and moderate-income Washingtonians pay up to six times more as a share of income compared to the wealthiest residents.

This year we can take a step to balance out our upside-down tax code by passing the Working Families Tax Credit. The two Working Families Tax Credit bills (HB 1527/SB 1580) are both in committee. HB 1527 was introduced by OAV-endorsed State Representative Debra Entenman, and has more than 30 co-sponsors in the House of Representatives. The companion bill in the Senate, SB1580, was introduced by OAV-endorsed State Senator Joe Nguyen, the first Vietnamese-American elected to that Chamber, and has 18 co-sponsors as of February 10.

The credit would put an average of $350 back into the pocket of nearly 1 million Washington residents. It would recognize the important contributions of immigrants, caregivers and young workers without children.  And it would mark an important step in reforming our upside-down tax system, reducing how regressive our tax system is.

Maggie Humphreys of Momsrising described the tax credit as, “one of the strongest tools we have for combating poverty.”

The legislation builds off of the federal earned income tax credit, a critical policy to help families with lower incomes pull themselves out of poverty. Eligible participants include working parents with children, childless individuals between the age of 19 and 64, caregivers of disabled or elderly relatives, students enrolled in higher education who do not receive state financial aid, and people who file their taxes using an ITIN number.  Just as important, it recognizes the important contributions that these workers and caregivers make to the economy.

Martin Negrete from All In For Washington said, “Funding a modernized WFTC is a critical first step to balancing our tax code and breaking down barriers of racial justice. Our state budget should reflect Washington’s progressive spirit and booming economy, but too many of us are only one paycheck away from poverty.”

Not only is this legislation right for combating poverty, but it closes critical gaps that disproportionately affect immigrant communities.

Louie Tan Vital, a master’s candidate at The UW Evans School, pointed out that many immigrant families live in multi-generational households. In communities where it is taboo to place elderly parents in care facilities, many immigrants are caregivers. This bill expands eligibility of the tax credit, providing relief to these hardworking individuals. Tan Vital, who comes from an immigrant family herself, closed her testimony with a simple statement, “This is culturally-competent legislation that we can all celebrate.”

OneAmerica urges our legislators to vote yes on the Working Families Tax Credit, key legislation that will help people of color, immigrants, and all low-income Washingtonians.