Washington Working Families Tax Credit

In 2008, the Washington State Legislature enacted the Working Families Tax Credit (WFTC, also called the Working Families Tax Exemption), but it was not funded until 2021, when Governor Jay Inslee signed HB 1297 / SB 5387. The WFTC provides up to $1,200 to filers who are eligible for the Earned Income Tax Credit, or who would be if their children had Social Security Numbers rather than Individual Taxpayer Identification Numbers. Washington will deliver the first WFTC payments in 2023, based on 2022 tax returns.

Examples

from policyengine_us import IndividualSim
import pandas as pd
import plotly.express as px


LIGHT_GRAY = "#F5F5F5"
GRAY = "#BDBDBD"
BLUE = "#5091cc"
LIGHT_BLUE = "lightblue"
DARK_BLUE = "darkblue"

COLOR_MAP = {"0": GRAY, "1": LIGHT_BLUE, "2": BLUE, "3": DARK_BLUE}


def make_wftc(adults, children):
    sim = IndividualSim(year=2022)
    sim.add_person(name="head", age=25)
    members = ["head"]
    if adults == 2:
        sim.add_person(name="spouse")
        members += ["spouse"]
    for i in range(children):
        child = "child{}".format(i)
        sim.add_person(name=child, age=6)
        members += [child]
    sim.add_tax_unit(name="tax_unit", members=members)
    sim.add_spm_unit(name="spm_unit", members=members)
    sim.add_household(name="household", members=members, state_code="WA")
    sim.vary("employment_income", max=60_000, step=100)
    return pd.DataFrame(
        dict(
            employment_income=sim.calc("employment_income")[0],
            wa_wftc=sim.calc("wa_working_families_tax_credit")[0].round(),
            mtr=-sim.deriv(
                "wa_working_families_tax_credit",
                "employment_income",
                wrt_target="head",
            ),
            adults=adults,
            children=str(children),
        )
    )


# Make a table of WFTCs for different numbers of adults and children.
l = []
for adults in range(1, 3):
    for children in range(0, 4):
        l.append(make_wftc(adults, children))

df = pd.concat(l)

LABELS = dict(
    employment_income="Employment income",
    mtr="Marginal tax rate of Washington WFTC",
    adults="Adults",
    children="Children",
    wa_wftc="Washington WFTC",
)

fig = px.line(
    df,
    "employment_income",
    "wa_wftc",
    color="children",
    animation_frame="adults",
    labels=LABELS,
    title="Washington Working Families Tax Credit",
    color_discrete_map=COLOR_MAP,
)
fig.update_layout(
    xaxis_tickformat="$,",
    yaxis_tickformat="$,",
    plot_bgcolor="white",
    xaxis_gridcolor=LIGHT_GRAY,
    yaxis_gridcolor=LIGHT_GRAY,
)
fig.show()