Cutting through Washington’s tax maze | Don Brunell’s Business View

"Keep it simple." This old saying is more than a bumper sticker slogan, it's a principle that is especially important when it comes to taxes and regulations. Washington employers have been working for decades to simplify our state's tax and regulatory policies. Currently, employers must work their way through a maze of complex, overlapping and often contradictory regulations and tax rules that differ from one city to the next, one county to the next.

“Keep it simple.” This old saying is more than a bumper sticker slogan, it’s a principle that is especially important when it comes to taxes and regulations.

Washington employers have been working for decades to simplify our state’s tax and regulatory policies. Currently, employers must work their way through a maze of complex, overlapping and often contradictory regulations and tax rules that differ from one city to the next, one county to the next.

It’s like playing a game that has 50 different sets of rules.

Wrestling with those costly and cumbersome requirements means employers — particularly small employers — spend time and money on paperwork that could be better spent creating jobs.

That’s why Gov. Gregoire is supporting tax simplification legislation. The governor wants to make it easier for all businesses, especially small businesses, to calculate and pay their Business and Occupation (B&O) taxes.

B&O taxes are assessed on a business’ gross income, regardless of profit. The state imposes a B&O tax, but local jurisdictions do as well. The amount of the local B&O taxes, as well as how they’re calculated, varies from one jurisdiction to the next.

Gregoire describes the situation this way: “For Washington businesses, especially small business owners who operate with little help, paying state and local B&O taxes is at best complicated and at worse a nightmare.”

Under the governor’s proposal, the state of Washington would be the single collector of all local and state B&O taxes, and the state would rebate to each local jurisdiction their share of the tax — similar to how the state currently handles state and local sales taxes.

The governor also wants to create a central state website where people could apply for or renew state and local business licenses, eliminating the need for similar websites currently operated in more than 50 cities around the state.

“It will save businesses money and aggravation, reduce state and local government red tape and make Washington a friendlier place to set up a business,” notes Gregoire.

But some of the state’s largest cities are pushing back against the governor’s proposal, saying they’ll lose millions if tax simplification becomes law.

Seattle authorities say the city could lose between $23 million and $44 million a year. Tacoma officials estimate their city will lose $4 to $7 million a year. Critics say cities will lose out on millions in tax penalties and interest — money that would now go to the state — and city officials fear that state auditors will not be as aggressive in pursuing tax cheats.

Seattle, Bellevue, Tacoma, Everett and Bellingham say they’re already working on a plan to simplify local tax payments, and lawmakers should wait to see how their project works before passing the governor’s plan.

Gregoire rejects the cities’ criticisms. Noting that the state currently collects and rebates local sales taxes, the governor said, “These horror stories of how they’re losing money? No they’re not. We will give it back. I think it’s the right thing to do for the small businesses of the state of Washington.”

Gregoire points out that 95 percent of Washington employers are small businesses with fewer than 50 workers. “If we can make it easier and cheaper for them to do business,” explained the governor, “they can afford to add more employees.”

“If we ever need a reform that helps business,” says Gregoire, “this is it.”

 

Don Brunell is the president of the Association of Washington Business.

More in Business

Lt. Dan needs lots of helping hands

Gary Sinise formed the “Lt. Dan Band” in early 2004 and they began entertaining troops serving at home and abroad. Sinise often raised the money to pay the band and fund its travel.

New Enumclaw wine bar aims for broad audience

Bordeaux Wine Bar is scheduled to be open Wednesdays through Sundays.

Streamlining regulations makes more housing affordable

There were over 21,000 people homeless in Washington State last year.

Water pressure mounting in West as population spikes

What is happening in California with water allocation disputes is a harbinger of what is to come in our state as well.

Railroads implementing positive track

While the investigation continues into the deadly AMTRAK derailment near Dupont, the clock continues to tick on the implementation of Positive Track Control (PTC). The deadline is Dec. 31, 2018.

Keep the holiday spirit all year long | Don Brunell

During the holidays, our thoughts naturally turn to giving — not just giving gifts, but donating our time and money to charities, disasters and community programs.

Finding balance in occupational licensing

Recently, the Institute for Justice (Institute) determined state licensing barriers for lower-income workers and aspiring entrepreneurs not only hurts people trying to establish themselves in a profession, but annually drives consumer prices up by $203 billion.

Remember 1993

Twenty-five years ago, business took a beating in Olympia. The swing to the left in the 1992 general election was swift and potent. It drove higher costs to employers and more government regulations.

Remembering Ed Carlson, Vietnam POW

Since last Veteran’s Day, Ken Burns’ in-depth documentary on the Vietnam War has aired. It is a powerful reminder of an unpopular war in which many “baby boomers” fought and died.

Rural prosperity essential to Washington

While Seattle is growing rapidly, our rural areas continue to struggle. They don’t have the corporate giants such as Amazon, Microsoft and Boeing creating jobs and economic opportunities. Farms are predominantly family-owned.

Amazon’s plan reminiscent Boeing’s Chicago move

Last year, Seattle Times aerospace reporter Dominic Gates wrote about the similarities and differences between Boeing’s corporate office move to Chicago and Amazon’s plan for a second headquarters.

LiveLocal98022 meeting cancelled

Bob Green, the night’s speaker, notified the organization he couldn’t attend due to an illness.