Democrats in Olympia Pass Progressive Tax Credit for Low-Income Residents

Rep. My-Linh Thai (D-41, Bellevue), sponsor of Working Families Tax Exemption bill. Image via House Democrats.

by Leo Brine

Democrats continue to advance a slew of progressive bills this legislative session aimed, they say, at making Washington more equitable. While last week’s headlines dramatized the news that Senate Democrats passed a capital gains tax, a longstanding progressive agenda item,  House Democrats were busy ushering through a major lefty item as well, the Working Families Tax Exemption bill (WFTE). Like the capital gains tax, the WFTE legislation would alleviate the pressure the state’s regressive tax system puts on low-income Washingtonians. In this instance: by giving roughly 500,000 of Washington’s lowest-income residents a tax rebate ranging from $500 to $950.

Both bills are longstanding items on the progressive wish list. The WFTE has existed as a state-level benefit program since 2008, but it was never funded because of the recession that hit late that year. The successful House vote this past Tuesday, March 9,  backed the bill for the first time with dollars from the general fund. That money will be allocated when the house rolls out its budget later this month. The Department of Revenue estimates the program will cost roughly $18 million to administer during the 2021-2023 biennium and pay out $250 million to about 420,000 residents, according to a fiscal note from the Department of Revenue.

“There’s been a large effort from the community to show lawmakers how regressive our tax system is,” said Andy Nicholas, senior fellow at the Washington State Budget and Policy Center. Nicholas says awareness of how regressive Washington’s tax system is has grown over time and now politicians understand the effects of regressive taxes on many of Washington’s underserved communities.

Thai was elected to represent the 41 district in 2018 and became the first refugee in Washington’s history to serve in the house of representatives.

Rep. My-Linh Thai (D-41, Bellevue), the sponsor of the WFTE legislation, represents a former Republican stronghold that gradually shifted to swing turf in the 2000s, before eventually turning blue in the late 2010s.

Bellevue’s population continues to grow more diverse. According to the 2000 U.S. census, Bellevue was a largely white community: 74 percent of the city’s residents were white, with Asian Americans, the second-largest group, making up 17 percent of the population. As of 2018, however, Bellevue is 35 percent Asian Americans and white residents make up 49 percent of the population. Bellevue also has a large immigrant population, with 38 percent of the city’s residents being foreign-born.

“Bellevue, Kirkland, Redmond, the whole section of the 405 corridor, there’s [been] a significant shift,” Thai told PubliCola. According to Thai, a demand for affordable housing and making sure their children get a quality education are top priorities for her diverse constituency. Some constituents Thai has meet with tell her before they immigrated, they were working well-paying jobs, but now have to take multiple low-paying hourly jobs in Bellevue and still struggle to make ends meet.

Rep.Thai herself immigrated with her parents to Washington as a Vietnamese refugee when she was 15. Her parents traded the elite jobs they had in Vietnam for menial positions when they immigrated: Her mother went from being the vice-president of a bank to working as a barista in a hospital. Thai was elected to represent the 41st district in 2018 and became the first refugee in Washington’s history to serve in the House of Representatives. She and Sen. Joe Nguyen (D-34, West Seattle) are the state’s first Vietnamese legislators.

To qualify for the WTFE rebate, applicants must have paid both Washington state and local sales and use taxes; received a federal Earned Income Tax Credit; and have been a Washington state resident for more than 180 days of the year the rebate is claimed. Filing can be done with a Social Security number or an Individual Taxpayer Identification Number—which expands the tax exemption to those the IRS requires pay taxes, but who do not qualify for a Social Security number, including many immigrants.

People with no children must make no more than $15,820 to qualify for the tax credit. For joint filers with three or more children, the maximum qualifying income is $56,844.

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