EITC Outreach
An estimated $80 million of Earned Income Tax Credit (EITC), a refundable federal income tax credit for low to moderate-income people, goes unclaimed each year in Washington state. Since 2006,WABC, along with the local asset building coalitions, has led an EITC outreach campaign across the state. Between the 2006 and 2007 tax years, the campaign resulted in an 18% increase in tax refunds at free tax sites, bringing an additional $5 million in federal dollars to state citizens.
The Governor's proposed budget cuts $1 million dollars in support for local asset building efforts, which would reduce the impact of the EITC outreach campaign. It is important to make sure that investments made in our innovative asset building infrastructure and services are not lost, and this important, wealth-building work moves forward.
WABC Position: Preserve full funding ($1.7M) for local asset building coalitions and EITC outreach
Individual Development Accounts
Washington State’s Individual Development Accounts (IDAs) are matched savings accounts for people with lower incomes that help them save for homes, small businesses and other assets. Participants receive financial training to help them plan a family budget and save. This financial training has led to families purchasing homes, and accountholders having a 0% foreclosure rate. State IDA funds have leveraged $1.8 million in federal and private funds that contribute to accounts. Successful IDA outcomes are guaranteed because state funds that are matched with individual savings are only expended when the asset is purchased.
WABC Position: Dedicate $1 million to Individual Development Accounts in the '09-'11 budget
Modifying Asset Limits
In addition to using a family's income to determine eligibility for public benefit programs, Washington State also limits eligibility to those with few or no assets. If a family has assets over the state’s limits, the family must deplete longer-term savings in order to receive what is often short-term public assistance. Families who are receiving public benefits are actually penalized for saving because even modest accumulation of assets can make a family ineligible for assistance. Asset limits should be increased, and opportunities for low-income families to save for their future should be encouraged.
WABC Position: Modify Asset Limits in public benefits programs
Working Families Rebate
Families with lower incomes in Washington State pay a larger share of their income toward state and local taxes than low-income households in any other state. The creation of a Working Families Rebate (WFR) would cut taxes for more than 350,000 working families and provide more balance to our state and local tax system by providing eligible applicants a sales tax rebate equal to 10% of the federal Earned Income Tax Credit (EITC). Recipients would also have the option of saving their rebate in an asset-building program such as an IDA or other long-term assets.
WABC Position: Fund the Working Families Rebate
