As an advocate for progressive tax reform I didn’t have high hopes for the current legislative session. Despite near supermajorities in both houses, the Democratic leadership seemed content to play it safe heading into the 2008 election… the nation’s most regressive tax structure be damned. But it turns out I may have been too pessimistic.
State Sen. Craig Pridemore introduced today SB 6809, a bill that would extend a state sales tax refund to the 350,000 Washington households who qualify for the federal Earned Income Tax Credit, putting an average of $170 annually back into the pockets of working families. Rep. Tammy Green is introducing a companion bill in the House, and word is that the bill has strong support from both Senate Majority Leader Lisa Brown, and House Speaker Frank Chopp. A tax cut targeted at those who need it most? Who’d a thunk?
Washington’s lowest income families currently pay 18 percent of their income in state and local taxes, whereas our wealthiest pay just 3 percent. The “Working Families Credit” would offer a maximum rebate of $470 (10 percent of the federal EITC,) effectively reducing the recipient’s sales and consumption taxes by about 30 percent. Other states offer similar extensions to the EITC, but Washington would be the first such state without an income tax. The Washington State Budget and Policy Center has issued a policy paper with more details.
It will be interesting to see the response to this Democratic bill, as the federal EITC generally enjoys broad bipartisan support, and tax cuts tend to be the Republican solution to everything from recession to gout. I’m particularly curious to see on which side the Seattle Times editorial board falls; I suppose it is possible they might argue that the bill’s estimated $60 million a year cost is ill advised in this time of economic uncertainty, but that would seem disingenuous coming from a board that recently argued so vociferously for eliminating the estate tax, thus granting a $100 million a year tax break to the children of multi-millionaires.
I’m not sure how one argues against the Working Families Credit… but I’m pretty sure some folks will try.