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Bill Aims To Simplify Washington’s Business And Occupation Tax

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Some House Republicans and a couple of Democrats in Olympia have teamed up to try to overhaul the state’s business and occupation tax, arguing that the tax is convoluted and unfair to small business, and the time is right for reform. 

Washington’s B&O tax is kind of unusual compared with other states. The tax is levied on a company’s revenue, whether or not the business is profitable.  

Republican Representative Drew MacEwen is the prime sponsor of House Bill 2150. He says as a business owner, he knows that when times are tight, the tax can be onerous.

"It’s a tough pill to have to send in a tax payment when you’re not necessarily making money," MacEwen said.

The B&O tax dates back to the 1930s, and MacEwen says over the years legislators from both parties have given special interests lots of exemptions.

His bill would do away with most of those except for ones for aerospace and agriculture. MacEwen says his plan grew out of his work on the governor’s legislative task force for winning Boeing’s 777X line, and he says the rates and deductions he’s proposing would bring other industries more in line with the rates the aerospace industry got.

"I really feel that we need to level the playing field across the board for all industries," MacEwen said. 

MacEwen says about 285,000 small businesses would not have to pay B&O tax under his plan. But to keep it revenue neutral, some larger, highly profitable businesses would wind up paying more. The House Finance Committee is scheduled to hold a hearing on his bill on Friday.

In July 2017, Ashley Gross became KNKX's youth and education reporter after years of covering the business and labor beat. She joined the station in May 2012 and previously worked five years at WBEZ in Chicago, where she reported on business and the economy. Her work telling the human side of the mortgage crisis garnered awards from the Illinois Associated Press and the Chicago Headline Club. She's also reported for the Alaska Public Radio Network in Anchorage and for Bloomberg News in San Francisco.