Washington State legislature proposes significant B and O tax increases for businesses

Washington State lawmakers are considering significant changes to the Business and Occupation (B&O) tax structure, which could generate an estimated $6.4 billion in revenue over the next four years. During a recent Senate Ways & Means meeting, discussions centered on proposed increases to tax rates for various sectors, including retail, wholesaling, and manufacturing, which would see their rates rise from 0.471% to 0.5%. Additionally, businesses with income exceeding $1 million would face a rate increase from 1.75% to 2.1%.

The proposed legislation also includes a new surcharge for businesses with taxable income over $250 million, which would add an additional 0.5% tax on income exceeding that threshold. The financial institution surcharge would increase from 1.2% to 1.5%, while the advanced computing surcharge would rise dramatically from 1.22% to 7.5%, with the cap on this surcharge lifted from $50 million to $75 million.

Supporters of the bill argue that these changes are necessary to ensure that profitable corporations contribute fairly to state revenue, which is crucial for funding essential services. Advocates from various sectors, including education and healthcare, emphasized the importance of securing funding for critical services that support vulnerable populations.

However, the proposed tax increases have faced significant opposition from various business groups. Critics argue that the increases would disproportionately impact small businesses and essential sectors like food supply, healthcare, and construction, which are already grappling with rising costs. Many stakeholders expressed concerns that the tax hikes would lead to higher prices for consumers and could stifle economic growth in a state already facing a high cost of living.

As the committee continues to deliberate, the implications of these proposed tax changes remain a focal point of discussion, with potential amendments being considered to address the concerns raised by various stakeholders. The outcome of this legislation could have lasting effects on Washington's economic landscape and the funding of vital public services.