Sixty-four percent of small businesses operating in Washington state would be exempted from having to pay business and operating taxes under legislation sponsored by Sen. Guy Palumbo, who represents Bothell from the 1st District.
“Washington’s tax code is a mess,” Palumbo said. “Big business has carved out so many tax breaks we might as well be looking at Swiss cheese. My bill aims to fundamentally reform the way we tax businesses in our state so that everyone is paying their fair share, not just small mom-and-pop shops.”
Palumbo’s bill reforms the state’s B&O tax by implementing a small surcharge on Washington’s largest businesses to fund a tax cut for some of the state’s smallest businesses, and to generate revenue for K-12 education.
“Both the Republican and Democratic K-12 funding proposals call for additional revenue,” Palumbo said. “This bill would create a different source to draw from to resolve our school funding crisis while also providing much-needed tax relief to some of our state’s smallest businesses that are the backbone of our economy.”
Under Senate Bill 5840, all businesses would be exempt from paying B&O taxes on the first $200,000 they earn in gross revenue. To pay for it, the bill adds a 14 percent surcharge to all existing B&O rates for businesses that gross more than $200,000 in revenue. This proposal will raise almost $800 million per biennium to be used towards resolving the state’s K-12 funding crisis.
With these changes, businesses that gross less than $1.56 million will pay fewer taxes than they do now. Any businesses that gross over that amount will pay slightly more.
Palumbo added that big business benefits from this plan too because the revenue generated for education would help produce a highly educated and qualified workforce ready to drive our economy.