January 24, 2008 in City

Bill would add 10 percent to credit for working poor

Richard Roesler Staff writer
 

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OLYMPIA – As Congress debates an economic stimulus plan that could land an $800 to $1,600 check in your mailbox, state lawmakers are pitching their own plan to put a couple hundred dollars more in the pockets of hundreds of thousands of Washington’s working poor.

Senate Bill 6809, introduced late Wednesday by state Sen. Craig Pridemore, calls for the state to pay a 10 percent match to Washingtonians who annually claim about $600 million through the federal Earned Income Tax Credit.

The federal credit averages $1,668. So Washingtonians would see checks averaging about $167. The state would simply get a mailing list from the federal government and send out postcards telling people how to apply for the extra state payment.

“It’s really very simple,” said Pridemore, D-Vancouver. A House version of the bill is also reportedly in the works.

The idea comes from the Washington State Budget and Policy Center, which estimates it would cost the state about $60 million a year to send the checks to more than 350,000 Washington tax filers who qualify for the federal credit. Nearly half, 23, of the states, the group says, have a similar program already.

Based on calculations by the Budget and Policy Center, the program would particularly help struggling families in Spokane and poverty-stricken rural areas. More than 1 in 5 income tax filers in downtown Spokane claim the federal credit. In the Yakima area, it’s 1 out of 4.

“I’m very intrigued by this concept,” said Senate Majority Leader Lisa Brown, D-Spokane. “It’s a way to give some tax relief to families that really need it.”

Still, she said, the bill’s chances of passing this year seem slim. And $60 million “is a big number,” she said.

“But on the other hand,” Brown added, “I’m hearing a lot of people excited about it. It could be one of those ideas that picks up momentum pretty quickly.”

Brown also cautioned that even if it passes this year, it could take a year or two to launch the program.

The proposal may also face resistance from Republican lawmakers. Sen. Joe Zarelli, R-Ridgefield, said he thinks it would violate the state constitution.

“We need to talk about what it really is: a redistribution of wealth,” he said.

Rather than take money from some taxpayers and send it to others, he said, “I think we’d be better served by reducing the burden of taxes.”

If legislative leaders want to help low-income folks, he said, the state should reduce “sin taxes” – like cigarette tax – which disproportionately hurt the poor.

A Nixon administration anti-poverty program, the federal Earned Income Tax Credit was intended to boost the income of the working poor as an incentive to work. According to the IRS, a married couple with two children can qualify if their adjusted gross income – income minus some deductions – is less than $39,783 last year. (The maximum is $35,241 if they have one child and $14,590 with no children.) The maximum credit is $4,716. You must file a tax return to claim the credit.

Unlike Idaho, Washington has no state income tax. So under Pridemore’s bill, the money would be considered a low-income tax exemption from the sales tax.

“The rationale behind it is that they’ve already paid the tax” by buying things, he said. And since low-income people often don’t itemize on their federal tax returns, they don’t benefit from a relatively new law allowing people to deduct hundreds of dollars a year in Washington sales tax from their federal tax bill.

“I have sat here for three years now in the Legislature in Olympia and I’ve seen us do tax cuts and tax cuts and tax cuts for wealthy people and businesses,” said Pridemore. “This is a tax cut for people who really need the help.”


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