Senate passes rebate for low-income workers

By Brad Shannon | The Olympian • Published February 20, 2008

The Democratic-controlled state Senate passed a state tax rebate program to help lower-income families, just beating a legislative deadline for passage of bills early Tuesday evening.

The measure, dubbed the Working Families Tax Credit, piggybacks onto the federal Earned Income Tax Credit that sends an average $1,541 a year to low-income families claiming the credit in the Olympia area.

Substitute Senate Bill 6809 is scaled back from its original size. It would match the federal rebate with a 5 percent state rebate of at least $25 starting in 2010, growing to 10 percent and a minimum payment of $50 in future years — provided the state budget can sustain it.

Republicans, led by Sen. Joseph Zarelli, complained that the federal program has a poor record and is rated ineffective at the federal level. Zarelli said the aid instead should be aimed at homeowners.

But the bill's prime sponsor — Democratic Sen. Craig Pridemore of Vancouver — said it gives needed aid to families that hold jobs, live by the rules and try to make it in a society that promises them a decent life.

"The working families tax credit offers real relief to those who not only pay a great portion of their income in taxes, but who also pay a higher sales tax rate because they can't deduct their state sales tax payments on their federal tax forms," Pridemore said in a statement released after the 32-16 vote that broke along party lines.

South Sound Democrats, including Sens. Karen Fraser of Thurston County, Marilyn Rasmussen of Eatonville and Tim Sheldon of Potlatch, voted in favor of it; GOP Sen. Dan Swecker of Rochester was absent.

House Majority Leader Lynn Kessler, D-Hoquiam, said a House budget due for release today does not include money to set up the program. It is up to the Senate to provide the funding and bring the issue into later budget negotiations, according to Kessler.

About 350,000 families received the federal rebate in 2004, averaging about $1,700 per family. A family of four with an income of nearly $40,000 could qualify.

The bill includes a marketing element, according to Jeff Johnson of the Washington State Labor Council, who testified for the bill on behalf of a coalition of groups. That will help the state inform other low-income families that the credit is available, potentially bringing in more money to families that qualify.

Senate Majority Leader Lisa Brown, D-Spokane, said the tax rebate becomes available to many lower-income families that don't qualify for the federal sales-tax deduction that Congress authorized. About 26 other states offer a matching rebate for the EITC, but Washington would be the only one without an income tax, Brown said.

"It's a win, win, win," Brown said.

Sen. Fraser was among the bill sponsors and said it will make the state's tax load more fair. "It's hard to get more tax fairness in a state without an income tax," she said.

Zarelli questioned the bill's $4 million cost to set up the program and its hiring of 28 people to run it.