Who Gets a Big Tax Break in Washington State — and Who Doesn’t — Under Biden’s Tax Plan

Posted

The Washington state congressional district that would benefit most next year from President Joe Biden’s tax plan is represented by a Republican, Dan Newhouse of the 4th District in Central Washington, a Tax Foundation study says.

And the district in the state that would benefit least is represented by one of Congress’ leading progressive Democrats, Seattle’s Pramila Jayapal from the 7th District.

Washington has 10 congressional districts, seven represented by Democrats and three by Republicans.

The average taxpayer would see tax cuts in only two districts, the one represented by Newhouse and the Olympia-Tacoma area represented by Rep. Marilyn Strickland, a Democrat. But the study says that by 2026, when certain programs end, each district’s average taxpayer would see an increase.

The House this week took its first step toward an eventual final vote on Biden’s budget plan, a $3.5 trillion package that could later this year include tax breaks for the middle and lower classes and increases for many corporations and the wealthy.

Biden’s proposals include increasing the tax rate on top incomes, now 37%, to 39.6%, the rate in effect before the 2017 Republican-authored tax cuts.

Biden also wants to extend this year’s boost in the Child Tax Credit to 2025, make permanent this year’s increases in the Child and Dependent Care tax credit and raise the corporate tax rate, now 21%, to 28%.

The Tax Foundation, regarded as somewhat conservative, analyzed the impact of all of Biden’s tax proposals on Washington’s districts.

How much anyone pays or saves all depends on where one lives and how much income they earn. Critics of the analysis note that Biden has pledged not to raise taxes on anyone earning less than $400,000, so the averages are an unfair guide.

The analysis found that in Newhouse’s sprawling district, which stretches from the Canadian border to the Oregon border and includes Yakima, Richland, Pasco and Kennewick, the average taxpayer would save $559 next year.

The cuts would continue through 2025, but in 2026, the average district taxpayer would see an increase of $701. The increases are estimated to continue through 2031, the last year the study considers.

The taxes would go up because incomes are expected to go up and many of the big tax cuts, such as the Child Care Credit, would expire during the period. The study also anticipates that while the corporate tax increases are at first borne by shareholders, over time workers feel the impact.

Newhouse told McClatchy he supports lower taxes and a fairer, simpler tax code, and does not support the Biden budget package.

“President Biden and his cohort of far-left Democrats are racking up debt that Americans cannot afford. I am unequivocally opposed to this runaway spending package that will only create an unstable outlook for our economy, our nation’s future, and the next generation of Americans,” he said.

Too much federal money, he has said, goes to excessive spending.

“So, the next time the Biden administration tells you they need to raise your taxes, find out where that money is going first, and be prepared to speak out against wasteful spending. We cannot let them continue to experiment on our republic by picking your pockets,” the congressman said in April in his weekly column.

Democratic districts that would see higher average taxes next year include: 1st (Suzan DelBene), $1,779; 2nd (Rick Larsen), $391; 6th (Derek Kilmer), $477; 8th (Kim Schrier), $741 and 9th (Adam Smith), $1,503.

Taxpayers in the 10th district, represented by Strickland, would save an average of $64. The district includes parts of Thurston, Pierce and Mason counties and Olympia. The break would not last long; in 2023, the average would be an increase of $8, and the increases would continue through 2031.

Among Republicans, the average taxpayer impact would include increases in the 3rd District (Jaime Herrera Beutler), $381, and 5th (Cathy McMorris Rodgers), $97.

Critics of the data say it’s misleading.

Under the Biden plan, “no one making under $400,000 is going to have their taxes raised, so when you take millionaires and billionaires out of the mix, Democrats’ tax cuts for hard-working, middle-class families in every congressional district are much bigger and broader than these averages show,” said Henry Connelly, spokesman for House Speaker Nancy Pelosi, D-Calif.

The Tax Foundation used 14 Biden proposals in its analysis. Among the biggest potential breaks is expanding the Child Tax Credit through 2025.

The credit was increased this year, and qualifying families could receive up to $250 to $300, depending on a child’s age, each month this year starting in July.

In Newhouse’s district, several credits would be available because the average adjusted gross income next year is estimated to be $68,613.

The average child tax credit would be $1,107, the analysis said.

Taxpayers would also benefit from making the child and dependent care tax credit permanent, and expanding the Earned Income Tax Credit. Some of the breaks would be offset a bit by the impact of corporate tax increases.

Jayapal’s district offers a sharp contrast. The average adjusted gross income is listed as $154,126, and the average taxpayer would pay $2,754 more in taxes next year under the Biden plan.

Raising the top income tax bracket would mean a tax increase averaging $516. The corporate tax rate increase would wind up costing district taxpayers $1,125.

The credits available to middle and lower-income people would mean less. The Child Tax Credit, which is phased out at higher incomes, would provide an average break of $162, and the expanded earned income tax credit would save an average of $17.

Comments

No comments on this story | Please log in to comment by clicking here