BILL REQ. #:  H-5611.1 

READ FIRST TIME 02/12/08.   

     AN ACT Relating to providing a tax exemption for working families measured by the federal earned income tax credit; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   (1) The legislature finds that many Washington families have income that is too low to afford the high cost of health care, child care, and work-related expenses. Lower-income families pay a higher percentage of their income in state and local taxes than do higher-income families. The legislature finds that higher-income families are able to recover some of the sales and use taxes that they pay to support state and local government through the federal income tax deduction for sales and use taxes, but that lower-income people, who are not able to itemize, receive no benefit from this deduction.
     (2) Therefore, it is the intent of the legislature to evaluate potential revenue sources and the fiscal cost of providing a sales tax remittance program for low-income workers who claim the federal earned income tax credit. To make this evaluation, the department of revenue, in consultation with the department of community, trade, and economic development, shall conduct a study. The study must address the following elements:
     (a) Health care expenses, child care expenses, and work-related expenses, as a percentage of income, for Washington state workers claiming the federal earned income tax credit and the percentage for all other workers;
     (b) Payments for state and local taxes, as a percentage of income, for Washington state workers claiming the federal credit and the percentage for all other workers;
     (c) The number of Washington workers who claim the federal earned income tax credit;
     (d) The percentage of returns by county of workers claiming the credit;
     (e) Geographic distribution throughout the state of Washington of workers who claim the credit;
     (f) The percentage of returns of workers claiming the credit who have one or more qualifying children;
     (g) The fiscal cost of providing a Washington state sales tax remittance program to Washington workers claiming the credit;
     (h) Potential revenue sources to fund a Washington state sales tax remittance program;
     (i) Administrative issues related to implementing a Washington state sales tax remittance program;
     (j) Legal issues related to a Washington state sales tax remittance program;
     (k) State refunds, credits, or exemptions for workers provided in other states that are a percentage of, or based on, the credit.
     (3) The study may include any other matters the department determines necessary for the proper evaluation of the potential Washington state sales tax remittance program for low-income workers who claim the federal earned income tax credit.
     (4) The department shall report its findings to the appropriate committees of the legislature by December 1, 2008.
     (5) For the purposes of this section, "credit" or "federal credit" means the federal earned income tax credit.

NEW SECTION.  Sec. 2   If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2008, in the omnibus appropriations act, this act is null and void.