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(WASHINGTON, D.C.) – U.S. Senator Patty Murray today released the following statement on the Senate vote to extend tax cuts.  Murray, who voted twice this month for more responsible tax packages to extend middle class tax cuts, today voted to move forward with a compromise package that extends current tax rates for two years.  The package, which passed the Senate today, extends important tax cuts for middle class Washington state families, includes an extension of our state sales tax deduction and extends unemployment insurance for 13 months for out of work Washington state workers. 

What these tax cuts mean for Washington state families and their paychecks 

“I am disappointed that the only way to protect middle class families from a tax hike in January was to support an extension of all the Bush tax cuts.   That’s why I voted twice in the past month to extend tax cuts for our middle class families who have been hurt most by our economic downturn.   I am angry that Republicans played political games and held the middle class hostage to secure tax cuts for the wealthiest Americans.  

“The Republican game plan is simply irresponsible.  Extending benefits to those who need them least and adding to our debt is wrong.   But I also could not sit back and allow taxes to be raised on Washington state families who are just struggling to get by.

“In the end, this bill will allow hard working Americans who are stretching every dollar in these tough times to keep more of their hard earned money.  And it prevents Republicans from cutting off unemployment benefits to those who are fighting to get back to work, stay in their homes and put food on the table during this holiday season.

The bill also contains an extension of the state sales tax deduction, which I have championed for years, and gives Washington state residents the tax fairness we deserve.  

“Unfortunately, protecting the vast majority of Washington families came with an unnecessary and irresponsible provision for a very few Americans who aren’t facing those same hardships.

“There is absolutely no question that extending tax cuts for the wealthiest Americans is a wasteful and irresponsible portion of this compromise.  Getting our economy back on track and our fiscal house in order simultaneously means that we have to make smart investments.  Adding to the debt by indiscriminately giving tax breaks to wealthy Americans is a not a smart investment.

“But the reality is that too much is on the line for average families to allow partisan gridlock in Washington D.C. to once again endanger the livelihoods of millions in Washington state.

“I hear from unemployed workers everyday who tell me stories about being days or weeks away from losing their homes, I know that during a recession the last thing workers can afford is smaller paychecks, and now is no time to cut back on the economic support tax cuts provide for our small businesses.

“If we allowed political games to derail the help middle class families need, we would be failing the people that are depending on us to work together to get our economy back on track.

“I hope that those who will benefit the most from these tax cuts use them to help the most vulnerable, improve our communities, and invest back in our economy.  And it’s time for Republicans who spend election cycles talking about cutting our debt to do more than pander – and to join Democrats in the serious work of getting our economy back on track.” 

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Middle-Class Tax Relief Package – What it Means for Washington State Families and their Paychecks

Without this agreement a typical working Washington state family would have seen their taxes go up beginning on January 1, 2011 by thousands of dollars at a time when they can least afford it. This bill provides immediate and badly needed help for these families and small businesses through a variety of tax saving measures aimed at working class Washington families.

See more detailed information on all of the provisions in this bill.

Middle Class Tax Cuts

  • Extends Middle Class tax relief: This bill extend tax relief of more than $3,000 for a typical working family.
  • Payroll Tax Cut: Creates a payroll tax cut that is worth $1,160 for the average Washington state household ($58,000 in average income).
  • Alternative Minimum Tax relief: Extends for two years AMT relief which will protect thousands of Washingtonians from an additional tax bill of up to $5,600.
  • State Sales Tax Deductibility: Extends for two years sales tax deductibility for Washington state families. This extension provides tax fairness for Washington families, an economic boost for businesses, and puts money back in the pockets of our state’s taxpayers.
  • Higher Education Tax Credit: Extends the American Opportunity Tax Credit, a partially refundable tax credit worth up to $2,500 that helps students and their families cover the cost of tuition. Over 150,000 Washington state individuals claimed this tax credit in Tax Year 2009. Washingtonians on average saved $1,760 each using this credit to help pay for school.
  • Marriage Penalty: The proposal extends marriage penalty relief for two years. This will prevent some Washington state couples whose taxable income is in the same range from paying higher taxes.

Help for Struggling Families

  • Unemployment insurance: Includes a 13 month reauthorization of federal support for 99 weeks of unemployment insurance for laid off workers --  a policy that most economists agree is one of the most effective measures to spur our economy. There are over 260,000 Washington workers that are currently receiving unemployment.
  • Earned Income Tax Credit: The bill includes a continuation of the Earned Income Tax Credit providing up to $630 for Washington state families with 3 or more children. Nearly 400,000 Washington families utilized the Earned Income Tax Credit in Tax Year 2008.
  • Child Tax Credit: The $1,000 child tax credit will be extended for two years with the $3,000 refundability threshold established in the Recovery Act. This extension will ensure an ongoing tax cut to lower income families with children throughout Washington state. 559,000 Washington state families utilized the Child Tax Credit in Tax Year 2008.
Help for Small Businesses
  • Tax Cuts for Business Investment: Creates the largest temporary investment incentive in American history by allowing businesses to expense all of their qualified investments in 2011.  Estimates from the Treasury Department indicate this could generate more than $50 billion in additional investment nationwide next year.
  • Research and Development Tax Credit: Extends for 2 years research and development incentivizes companies use to create jobs by giving them a tax credit for qualified research spending.  The R&D tax credit is truly a jobs credit with 70% or more of the credit attributable to salaries and wages of U.S. workers performing research in the United States.
  • 15 Year Depreciation for Restaurant and Retail Improvements: Extends for 2 years a provision that incentivizes restaurants to upgrade by allowing them to write off the costs faster.
  • Credits for Hiring Military Personnel: The bill extends for two years the provision that provides eligible small business employers with a credit against the taxpayer’s income tax liability for a taxable year in an amount equal to 20 percent of the sum of differential wage payments to activated military reservists. There are approximately 28,000 National Guard and Reservists in Washington state according to the Washington State Department of Veterans’ Affairs.

Experience of Hypothetical Washington State Families

The following are approximate tax savings for hypothetical Washington state families and individuals across Washington state. The calculations do not include itemized expenses and other credits that would further reduce a family’s tax burden. They are intended to give a broad measure of the savings this bill provides.  Calculate other scenarios.

Everett, Washington: A married couple – an Aerospace Engineering and Operation Technician (mean annual salary in Washington state of $60,340) and a waiter/waitress (mean annual salary in Washington state $28,590) with two young children.

Estimated Federal Tax Burden:
If tax cuts were to expire on January, 1st 2011: $16,363
Under this bill: $11,554
Savings of: $4,809

Tacoma, Washington: A single mother working as a Home Health Aide (mean annual salary in Washington state of $23,010) with two young children.

Estimated Federal Tax Burden:
If tax cuts were to expire on January, 1st 2011: - $2,021
Under this bill: - $4,140
Savings of: $2,119

Vancouver, Washington: A married couple – a Computer Software Engineer (mean annual salary in Washington state of $99,080) and a Middle School Teacher (mean annual salary in Washington state of $56,790) with three children – one of which is a junior in college.

Estimated Federal Tax Burden:
If tax cuts were to expire on January, 1st 2011: $40,191
Under this bill: $32,499
Savings of: $7,692

Spokane, Washington: A single, Administrative Assistant (mean annual salary in Washington state $47,890 – approximate average salary of all Washington state workers)

Estimated Federal Tax Burden:
If tax cuts were to expire on January, 1st 2011: $9,928
Under this bill: $8,428
Savings of: $1,500