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Panel debates millionaire’s tax, B&O margins proposal and what it means for small business
Summary
At a Vancouver forum, state lawmakers and policy experts discussed the newly enacted millionaire’s tax, a proposed Texas-style margins replacement for Washington’s Business & Occupation (B&O) tax and implementation details — including indexing, a 2029 effective date and protections for small pass-through businesses.
At a Washington Policy Center forum in Vancouver, state lawmakers and policy analysts debated the newly enacted millionaire’s tax and a proposed overhaul of Washington’s business tax structure, with competing emphasis on fairness for households and predictability for employers.
Rep. April Berg (D-44), chair of the House Finance Committee, said the current B&O tax is “an outlier” and advanced a Texas-style margins tax in draft form as a way to make the business tax burden less regressive. Berg said the draft would shield many small firms and lower the rate for most businesses: “lowering that rate to about 1.75%,” she said, describing the proposal as aimed at fairness for the majority of businesses.
Why it matters: panelists said the combination of personal and business tax changes will determine whether Washington remains attractive to employers and workers. Rep. Monica Stonier (D-49) emphasized clarity and predictability, warning that confusion about who pays what can disrupt family-owned or pass-through businesses. “When people don’t understand what we’re trying to do,” Stonier said, “that makes it very unclear what happens if you have a privately owned, family-owned business.”
Rep. Berg stressed several implementation safeguards added to the millionaire’s tax when it was enacted: indexing the $1,000,000 threshold to inflation so it remains a million dollars in real terms; limiting application to individuals (though acknowledging some S corporations and pass-through entities will be affected); and creating an implementation committee of large and small businesses, CPAs and bipartisan legal experts to work through complexities before the tax takes effect in 2029. “We put an index in there. So 1,000,000 dollars will always stay 1,000,000 dollars,” Berg said, adding the measure’s effective-date and committee were designed to give businesses time to plan.
Business concerns: Mark Armstrong, a small-business owner and former legislator, welcomed the margins idea as a step to reduce B&O burdens but warned that other costs (carbon fees, licensing in multiple cities) cumulatively hit margins and may force price increases or staff reductions. Armstrong said predictability is essential: if thresholds shift or new levies appear, owners re-evaluate investment and retirement plans.
Panelists agreed the policy trade-offs are complicated and that regulatory simplification and transparent implementation will be necessary complements to any tax change. Berg said the margins proposal remains a draft and is intended to complement, not simply replace, conversation about how to balance rates and revenue.
Next steps: Berg and other legislators said further conversations with stakeholders and the implementation committee will shape final rules before the 2029 effective date.
